Gucci-owner Kering posts 10% drop in Q1 sales on sluggish Chinese demand

Kering's First-Quarter Sales:

• Kering, a French luxury group, reported a 10% drop in first-quarter sales.
• The decline was primarily due to a slowdown at its star label Gucci, impacted by weakness in Asia and undergoing a design overhaul.

Financial Outlook:

• Kering anticipates a "sharply lower" first-half operating profit due to the revenue decline and ongoing brand investments.
• Sales for the quarter ending in March were 4.5 billion euros, down 10% on a comparable basis.

Gucci's Performance:

• Gucci experienced an 18% sales decline in the first quarter, worse than the previous quarter's 4% drop.
• The brand is being pushed upmarket with a focus on classic leather goods under new creative director Sabato de Sarno.

Investment Plans:

• Kering plans to continue investing in Gucci throughout the year, expecting margins to be affected as a result.
• Early products from the new Ancora collection have been well received by consumers.

Market Impact:

• Concerns in the luxury sector arose about China's rebound potential, especially affecting Gucci's market prospects.
• Kering shares dropped by 18% since March 19, while competitors LVMH and Hermes also experienced declines.