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Kering Expects Sharp Drop in Operating Profit After Gucci Sales Tumble in China — Update

By Andrea Figueras


Kering expects sharply lower operating profit in the first half after sales slumped in the first three months and the company grapples with sluggish demand, particularly in China.

The French luxury-goods giant booked revenue of 4.504 billion euros ($4.80 billion) for the first quarter, down 11% in reported terms compared with the year-earlier period. The result came in line with analysts' forecasts of EUR4.51 billion, according to a poll of estimates compiled by Visible Alpha.

On a comparable basis, revenue fell by 10%, against a backdrop of normalization in the luxury sector and reflecting the turnaround strategy within the group's divisions, it said.

"Kering's performance worsened considerably in the first quarter," Chairman and Chief Executive Francois-Henri Pinault said.

Sales at star brand Gucci--the largest contributor to the group's revenue--dropped 21% in reported terms to EUR2.08 billion, in line with Visible Alpha consensus. On a comparable basis, Gucci revenue fell 18%, hit particularly by a sharp decline in the Asia-Pacific region.

However, the company pointed out that the brand'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.

"While we had anticipated a challenging start to the year, sluggish market conditions, notably in China, and the strategic repositioning of certain of our houses, starting with Gucci, exacerbated downward pressures on our topline," the CEO said.

Last month, the company warned that first-quarter sales were expected to decline due to a steep sales drop at Gucci in the Asia-Pacific region.

Kering had anticipated a fall of around 10% in group revenue compared with last year's first quarter, while Gucci revenue was expected to tumble by nearly 20% on year.


Write to Andrea Figueras at


(END) Dow Jones Newswires

April 23, 2024 12:36 ET (16:36 GMT)

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