Gucci falls for an eleventh straight quarter — sales are half their 2023 level
Down 8% in the quarter — days before Luca de Meo is due to unveil his plan to turn around the €33 billion group.
Sales at Kering’s Italian flagship brand Gucci dropped 8% in the first quarter from a year earlier, as the Iran war hurt spending by Middle East shoppers and curtailed international travel.
Retail revenues in the Middle East declined 11% in the quarter, despite growth in the first two months of the year before the war started on February 28. Finance chief Armelle Poulou said the conflict shaved 3% off overall Kering sales in March, or 1% for the quarter as a whole, with a similar effect at Gucci.
Gucci’s €1.35 billion in January-March sales came in slightly below analyst forecasts — a Visible Alpha consensus projected around €1.37 billion — marking the 11th straight quarterly decline. Once the group’s profit engine, Gucci’s first-quarter sales have halved from their 2023 level as years of aggressive price hikes, shifting aesthetics and managerial churn alienated parts of its customer base.
The timing stings: the result landed days before Kering CEO Luca de Meo was due to unveil his strategic plan to turn around the €33 billion group. Kering called the quarter a “first step” in its recovery and confirmed it still aims to bring Gucci back to full-year growth, with most analysts predicting the turning point in the third quarter.
Group sales, including smaller brands like Yves Saint Laurent and jeweller Boucheron, were flat year on year adjusted for currency, above an analyst expectation of a 5.8% decline, helped by strong jewellery and eyewear sales. Kering shares are down about 8% this year.
The first styles from Demna, who joined Gucci from sister brand Balenciaga last year, have entered stores in recent months, with hopes they can start to lift sales.
The brand saw some improvement in China, though luxury sales still declined year on year. “In China, we have an environment which isn’t helping, but we also have some of our own difficulties on which we are working,” Poulou said, adding the group needs to boost store traffic and improve marketing to resonate with local consumers. Trends in the United States accelerated.
De Meo, who took the reins in September, has moved fast to shore up the balance sheet through asset sales, deepen an alliance with L’Oréal and untangle the group’s once unwieldy governance. Investor focus now shifts to whether there are tangible signs Gucci’s revival is on track, after de Meo called last quarter’s 10% sales drop a possible turning point.