French luxury giant Kering anticipates a 10% decline in first-quarter sales

Luxury group Kering, still facing persistent challenges with its flagship brand Gucci, announced on Tuesday that it anticipates a decline of approximately 10% in its first-quarter revenue compared to the previous year, following a "difficult" 2023, according to its CEO François-Henri Pinault.

This performance is mainly attributed to a sharper decline in Gucci, particularly in the Asia-Pacific region, where the brand's revenue is expected to decline by around 20% compared to the previous year, according to the group.

Kering will release the official figures of its first-quarter revenue on April 23, after the market closes. The combined impact of the positive contributions from the consolidation of Creed, as well as the negative effects of exchange rates, is estimated to be between -1% and -2%.

The Gucci brand, representing half of the group's sales, already experienced a challenging period in 2023, with a 6% decline in sales and revenue falling below 10 billion euros. Despite this, Kering, which also owns brands such as Yves Saint Laurent, Bottega Veneta, and Balenciaga, remains confident in its long-term growth prospects.

To revive Gucci, François-Henri Pinault has implemented several initiatives, including appointing new executives within the brand and launching the new "Ancora" collection by Sabato de Sarno, which has received a favorable reception in some Gucci stores since its release in February.

However, some analysts remain cautious about the results of these revival efforts. Luca Solca from Bernstein expects more tangible signs of success, highlighting that the current challenges are specific to Kering but also reflect uncertainties and consumer spending in China.

Despite these challenges, Kering continues its strategy of moving upmarket, not only for Gucci but also for its other brands. François-Henri Pinault emphasized the importance of maintaining investments to ensure sustainable long-term growth, particularly by focusing on more sophisticated and high-end segments while preserving its appeal to aspirational customers.