PARIS – Kering reported on Wednesday a bigger-than-expected decline in first-quarter revenue, the latest set of disappointing results from the luxury group as its star label Gucci continues to struggle amid a worsening economic environment.
Group revenue in the first three months of the year amounted to 3.88 billion euros ($4.40 billion), an organic year-on-year decline of 14%, the Paris-based group said. A Visible Alpha consensus of analysts cited by HSBC had forecast a 9.7% drop.
“We are increasing our vigilance to weather the macroeconomic headwinds our industry faces,” Chairman and CEO Francois-Henri Pinault said in a statement.
Sales at Italian fashion house Gucci, which accounts for about half of total group revenue, were down 25%, below analyst expectations of a 19% decline.
Kering’s results were the latest signs the luxury sector could be headed for another tough year following U.S. President Donald Trump’s recent tariff announcements, which sparked fears of a recession, while sales in China, another crucial luxury market, remain weak.
Kering has closed 25 stores so far this year, finance chief Armele Poulou told journalists on a call, adding that the company was determined to further streamline its operations and shed underperforming boutiques.
Trends in Asia, where sales were down by 25%, were in line with those of the last quarter, while Western Europe and North America, both down 13%, saw a sequential deceleration, Kering said.
The group, which also owns fashion brands Yves Saint Laurent, Bottega Veneta and Balenciaga, has been facing pressure from financial markets after a string of profit warnings last year as it tries to revive its core Gucci brand. Its shares have lost over 60% of their value since the first warning in March 2024.
In an effort to reverse the fortunes at Gucci, its former cash cow which lost market share and almost a quarter of its revenue last year, Kering recently named in-house talent Demna as the label’s new design chief, triggering another share selloff from investors who had hoped for a prominent external hire.
The designer change, effective July, is likely to further delay the label’s long-awaited rebound, analysts said.
Demna has already started working with Gucci teams, Poulou said. She, however, declined to say when the designer’s first collection will be shown on the catwalk.
(Reporting by Tassilo Hummel and Mimosa Spencer; Editing by Makini Brice)
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