Proactive Investors - Gucci and Yves Saint Laurent owner Kering (EPA:PRTP) SA (EPA:KER) shares dropped more than 7% after it issued a profit warning on Wednesday.
The luxury fashion group said its performance “worsened considerably” in the first quarter, blaming sluggish Chinese demand and restructuring at its fashion houses.
Revenue for the France-based group for the first quarter of 2024 fell 11% to €4.5 billion, with sales at Gucci down 21%
“In view of this revenue decline, together with our firm determination to continue investing selectively in the long-term appeal and distinctiveness of our brands, we now expect to deliver sharply lower operating profit in the first half of this year,” said chairman and chief executive officer François-Henri Pinault.
The group anticipates a 40-45% decline in first-half recurring operating income year on year.
The lower sales came against a backdrop of “normalization” in the luxury sector, Kering SA (EPA:KER)id, plus the “transitions” at its fashion houses and a 3% currency impact.
Gucci sales fell 18% on a like-for-like basis, Yves Saint Laurent was down 6% and other houses down 6% but Bottega Veneta increased LFL sales 2% and the Kering Eyewear & Corporate segment grew 9%.
“Gucci’s new collections, which have gradually become available in stores since mid-February, have been very well received, particularly in the ready-to-wear and shoes categories,” the company said.
By region, a sharper decline in turnover was recorded in the Asia-Pacific region, though trends in Western Europe, North America and Japan were in line with the fourth quarter of last year.