Kering reports 14% sales drop in first quarter as Gucci sales slide further

PARIS, April 23 - Kering PRTP.PA 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.