The listing of Kering shares
PRTP.PA was headed lower at the open on Wednesday on the Paris Stock Exchange after the luxury group warned that first-quarter sales of its flagship brand Gucci would fall by around 20% due to weak demand in Asia.
At 08:05 GMT, Kering shares were reported to be down more than 13% according to LSEG data.
The luxury sector as a whole is suffering: LVMH
LVMH.PA loses 2.47%, Hermès HRMS.PA drops 1.51%, the Swiss Richemont CFR.S loses 4.4% and the British Burberry
BRBY.L drops 5.3%.
The warning is a reminder of the challenge Kering faces as it seeks to revive momentum at Gucci, which accounts for half of the group’s sales and two-thirds of its operating profit.
According to James Grzinic, an analyst at Jefferies, this warning, which comes as new Gucci models arrive in stores, is a sign that more classic products, such as leather handbags, on which the brand has focused emphasis as part of its move upmarket, are not meeting the expected response among consumers.
The “encouraging” reception reserved for the new models is “eclipsed by this headwind”, believes James Grzinic.
The brand is undergoing an overhaul under the creative direction of Sabato de Sarno and is seeking to regain lost ground in recent years to rivals such as Louis Vuitton and LVMH-owned Dior LVMH.PA .
Bernstein analysts had recently pointed out that De Sarno’s show in Milan in February – his third – attracted “overall positive” reactions from the industry and social media.
However, they questioned the appeal of Chinese customers to the “discreet luxury of Sabato De Sarno”.
Beyond the challenges facing Kering, analysts noted that this warning could weigh on the luxury sector, with Citi calling it a “rather worrying signal.”
Expectations of a strong rebound in China were dampened by the country’s real estate crisis and high youth unemployment. Consulting firm Bain forecasts single-digit growth for the Chinese luxury market this year, following growth of 12% in 2023.
In terms of results, the group announced in a preliminary press release that it expected a drop in sales of around 10% for the first three months of the year, which is significantly more marked than the expectations of analyzes which were counting on a decline. by 3%.
(Report by Mimosa Spencer, written by Kate Entringer, edited by Blandine Hénault)