French luxury goods company Kering experienced a sharp stock decline Wednesday, with shares falling as much as 10% after its flagship Italian brand Gucci reported weaker-than-anticipated first-quarter revenue figures.
The luxury fashion house saw revenue decrease by 8% during the quarter, representing the brand’s 11th consecutive period of declining sales. Industry analysts attribute the downturn to reduced spending from Middle Eastern consumers amid ongoing regional conflicts and decreased international tourism.
By 0827 GMT, Kering’s stock had dropped 8.5% to 255 euros, positioning the company for its most significant single-day loss in over 12 months.
The disappointing results arrive just ahead of a crucial presentation by Kering CEO Luca de Meo, who plans to reveal his comprehensive strategy for revitalizing the 33-billion-euro ($39 billion) corporation’s performance.
Financial analysts at Citi noted the challenges ahead, stating: “While guidance was confirmed, the timeline for a Gucci turnaround remains uncertain and likely gradual, against a challenging macro backdrop and ongoing geopolitical tensions.”
The luxury sector overall faces similar headwinds, with industry leaders LVMH and Hermes also experiencing reduced consumer demand due to Middle Eastern conflicts affecting their customer base.
While Kering highlighted robust Gucci performance in North American markets, JPMorgan analysts suggested this growth pattern likely reflects broader luxury industry trends rather than Gucci-specific improvements, noting significant double-digit revenue drops across all other global markets.
JPMorgan researchers expressed skepticism about recovery prospects, commenting: “This suggests, in our view, that the turnaround will take a lot longer, and much more work, than the bulls would hope for.”
Year-to-date, Kering shares have declined approximately 7% in 2024.
