Kering’s dramatic first-quarter warning — forecasting a 20 percent comparable sales decline at Gucci — might have sent a shudder through luxury, but investors saw it as a relatively isolated hit to the Paris-based fashion group.
Shares of Kering dropped 11.9 percent Wednesday to $375.20 euros, erasing 6.2 billion euros from the company’s market capitalization at a swipe.
Some of Europe’s other big luxury players were feeling pressure in the market, but nothing like Kering. Among the day’s decliners were Burberry Group, down 3.3 percent to 11.90 pounds; Salvatore Ferragamo, 2.1 percent to 11.11 euros; LVMH Moët Hennessy Louis Vuitton, 1.6 percent to 846.20 euros, and Moncler, 0.4 percent to 68.24 euros.
Kering, which expects its overall comp sales to fall by about 10 percent in the first quarter, said Gucci was seeing weakness specifically in the Asia Pacific region.
But the market seemed to see that as more of a Kering issue than a China issue.
“There’s a decreasing interest in Gucci in both China and the US. Gucci heavily relies on attracting new Asian customers who are very sensitive to brand heat,” said Yanmei Tang, an analyst at Third Bridge, which conducts research for investors. “The new Gucci products introduced so far lack a unique angle and are too similar to past seasons. This makes it unlikely for them to attract renewed interest from customers.”
Gucci creative director Sabato De Sarno is reworking the brand with chief executive officer Jean-François Palus. But De Sarno’s debut didn’t start to hit stores until mid-February — about halfway through the first quarter — and Kering said it has been well received so far.
“Early products, primarily ready-to-wear, from the Ancora collection have been on offer in selected Gucci stores since mid-February,” Kering said. “The new collection, whose availability will gradually be ramped up over the coming months, is meeting with highly favorable reception.”
