Kering’s luxury woes persist as Gucci’s demand doldrums weigh on sales
Gucci, which has struggled to connect with high-end buyers, accounts for nearly half of Kering’s annual sales.
Kering shares dropped as much as 4% after the French luxury titan missed the mark on first-quarter sales and warned of more turbulence ahead.
Revenue sank 14% to $4.1 billion, falling short of analysts’ estimates and marking a rough start to what looks to be rocky road for the rest of the year. Gucci — Kering’s crown jewel and biggest sales driver — saw revenue nosedive 25% last quarter, hit hardest in the US and Asia, where demand has cooled fast. The label’s once hot designs are struggling to land with luxury shoppers, and its deep reliance on Chinese consumers is now more of a liability than a strength.
In a bid to reignite buzz, Kering tapped Demna Gvasalia as Gucci’s new artistic director last month. But investors weren’t sold — the stock slid on the announcement, underscoring how high the stakes are for brands in reboot mode. Kering’s not the only luxury conglomerate facing demand doldrums: last week, shares of LVMH slipped nearly 8% after the French luxury goods conglomerate also posted weaker-than-expected sales for the first quarter.
US ADRs of Kering are now down nearly 23% this year.
