Kering reported a 11 percent dive in revenues for the first quarter to EUR 4.5 billion, with the French luxury giant citing sluggish Gucci sales, especially in Asia Pacific.
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In the first quarter, Gucci revenue totalled EUR 2.1 billion, down 21 percent as reported and down 18 percent on a comparable basis.
Revenue from the directly operated retail network fell by 19 percent on a comparable basis in the first quarter, impacted by a sharp decline in Asia-Pacific. Wholesale revenue fell 7 percent.
Yves Saint Laurent’s revenue fell to EUR 740 million, down 8 percent as reported and down 6 percent on a comparable basis.
Revenue from the directly operated retail network was down 4 percent on a comparable basis, held up by strong growth in Japan, offset by tough market conditions in Asia-Pacific.
Bottega Veneta’s revenue totaled EUR 388 million, down 2 percent as reported and up 2 percent on a comparable basis, where sales in Asia Pacific fell slightly.
Finally, the Parisian group’s other houses totaled EUR 824 million in the first quarter, down 7 percent as reported and down 6 percent on a comparable basis.
At Balenciaga, trends improved in Western Europe and Japan, with the brand proving resilient in Asia-Pacific.
By region, Asia-Pacific fell the hardest, down 19 percent, followed by North America, down 11 percent, and Europe, which declined 9 percent. The firm’s rest of the world revenues lifted 6 percent, while revenues in Japan rallied, up 16 percent for the quarter.
“Kering’s performance worsened considerably in the first quarter. 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,” said François-Henri Pinault, chairman and chief executive officer.
“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. All of us are working tirelessly to see Kering through the current challenges and rebuild a solid platform for enduring growth.”
Looking ahead, Kering warned that profit will plunge in the first half of the year after wealthy shoppers continue to curb spending. Recurring operating income will drop between 40 percent and 45 percent in the first six months.
Earlier this month, Kering appointed Stefano Cantino to the newly created role of deputy CEO at its Gucci brand, in a bid to reignite growth at the Italian luxury marque.