Gucci owner Kering saw its shares fall over 5 per cent on Thursday after the group revealed its sales dropped more than expected in the first quarter.
Shares have lost around half their value in a year – it is one of the worst-performing luxury goods stocks.
Kering reported a 14 per cent fall in annual sales to £3.3billion, with a 25 per cent drop at flagship label Gucci to £1.4billion, suggesting the broader luxury sector faces another tough year.
The drop in sales was worse than forecasts from analysts at Citibank and Barclays, who had estimated year-on-year falls of 10 per cent and 12 per cent respectively.
Kerig, which also owns Yves Saint Laurent, blamed Gucci’s dwindling sales on ‘low store traffic.’
The sales report confirmed ‘a weakening backdrop’ since February, analysts at Jefferies said, noting ‘the uncertainties around reigniting Gucci’s desirability remain plentiful.’
Fashion crisis: Sales at Kering, led by billionaire Francois-Henri Pinault (pictured with actress Salma Hayek) fell 14% to £3.3bn year-on-year
The industry, languishing after a slowdown in demand, is reeling from Donald Trump’s trade war.
Chief financial officer Armelle Poulou said Kering would ‘most likely adopt a careful, gradual approach’ of price rises to offset tariffs.
And the group’s leader, billionaire Francois-Henri Pinault vowed: ‘I am convinced that we will come out stronger.’
Kering has struggled to compete with rivals such as LVMH and Hermes, whose pricey products are seen as status symbols.
Russ Mould, investment director at AJ Bell, said: ‘Gucci-owner Kering offered further evidence of the luxury sector’s woes as its core brand struggles to recover against a difficult backdrop.
‘There is a large degree of scepticism about recently appointed Gucci creative director Demna Gvasalia’s ability to revive the brand, based on his CV.
‘After a string of profit warnings in 2024, Kering has very little credit in the bank with investors and new Gucci boss Stefano Cantino is already on the back foot, having been appointed at the start of this year.’
He added: ‘Luxury is supposed to be immune to the vagaries of the economy as its customer base are relatively untouched in a downturn.
‘However, the Chinese market, which has been a source of significant growth for the industry, has been depressed since Covid and what’s now apparent is not all luxury brands are created equal.
‘Hopes North America could help drive Kering’s sales have been undermined by the recent tariff drama and Gucci will hope its ability to weather previous storms and come out the other side holds true this time around.
‘Given the durability of the brand it could ultimately become a takeover target in a sector which is beginning to see consolidation.’
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