Gucci’s revenue declined 8% during the first quarter of the calendar year, Kering SA stated on Tuesday. This is almost twice the decline estimated by analysts, Bloomberg reported.
The firm’s shares declined 8.1% in early Paris trade, leaving them down around 14% this year, so far.
Gucci and Kering both have witnessed overhauls in the last year with Luca de Meo’s appointment as group CEO, a new Gucci CEO as well as the appointment of Demna Gvasalia as artistic director of the Italian brand. The designer, who goes by his first name, was previously at Balenciaga for a decade, another Kering label.
Since taking over in September, De Meo has been quick to shuffle management and has moved faster to get the products presented at fashion shows into stores. Some of the pieces unveiled during Demna’s first Gucci catwalk collection in February in Milan, for example, were available for purchase immediately after the show.
Kering’s retail revenue in the Middle East fell 11% during the first quarter, hurt by the war that started in late February. The region represents around 5% of its overall retail revenue. The group said it’s closely monitoring the conflict’s impact on global tourism trends.
The war had a 1 percentage point negative impact on overall group sales, according to Chief Financial Official Armelle Poulou. French rivals LVMH and Hermès also cited the conflict when reporting weaker-than-expected sales this week.
Controlled by the Pinault family, Kering has underperformed rivals in recent years as Gucci’s products lost popularity. The label’s performance is key for Kering because it accounts for about 60% of profit.
“Gucci remains our top priority,” De Meo said in the statement. “A comprehensive turnaround is underway, with decisive actions across client, distribution and, above all, the offer.”
The new CEO will hold his first capital markets day Thursday in Florence, the Italian town where Gucci was founded in 1921.
In the past year, Kering has worked on reducing its debt level, in part by selling its beauty division to L’Oréal SA in a €4 billion ($4.72 billion) cash deal.
With inputs from Bloomberg
