PARIS (Reuters) -Shares of Kering dropped 5.42% at market open on Thursday, after the company reported first-quarter sales below analysts’ expectations.
Kering after the market close on Wednesday reported a 14% annual decline in sales, with a 25% drop at flagship label Gucci, adding to evidence the luxury sector faces another tough year.
The sales report confirmed “a weakening backdrop” since February, said analysts at Jefferies noting “the uncertainties around reigniting Gucci’s desirability remain plentiful.”
The brand, which accounts for around two-thirds of group profits, is betting on in-house talent Demna to reignite sales, but new designs will only arrive gradually at the end of the year.
The French luxury group flagged worsening sales in North America and Western Europe and said it expected sales to continue to fall in double digits, percentage-wise, in the second quarter, before starting to improve.
This leaves the “heavy lifting” for the second half, which will likely depend on a recovery in Chinese demand, noted analysts at Bernstein.
Prospects for the luxury industry, which had pinned hopes on growth from the United States to help pull it out of a slump, have been darkened by recession fears prompted by U.S. President Donald Trump’s tariff announcements.
(Reporting by Makini Brice and Mimosa Spencer; editing by Barbara Lewis)
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