Gucci and Yves Saint Laurent owner Kering SA (EPA:KER) issued a profit warning after 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.