Kering (PAR: KER), the French luxury conglomerate, saw its shares plummet by over 9% at Wednesday’s opening bell, following a bleak profit warning driven by slumping Gucci sales. The company disclosed an anticipated first-half operating income decline of 40-45% year-on-year. This stark forecast underscores challenges in the high-end market, where consumer discernment is intensifying.
François-Henri Pinault, Kering’s CEO, linked this downturn to a troubling first quarter, marked notably by weak performance in China and strategic shifts at Gucci. Despite efforts to rejuvenate its brand appeal, Gucci’s first-quarter sales fell by 18%, a stark contrast to the resilience displayed by rivals like LVMH and Hermes amid similar market conditions.
This downturn isn't limited to Gucci; Kering revealed a broader struggle across its portfolio, with a 6% dip in Q4 2023 revenues affecting all major brands, including Yves Saint Laurent. The company remains committed to investing in its brands' long-term allure, even as immediate financial pressures loom.
