KERING (KER-FR) earnings Q1 2025

Shares of Kering fell on Thursday after the French luxury goods group posted lower than expected first-quarter sales and pointed to further macroeconomic headwinds ahead.

Revenues at the fashion giant plunged 14% year-on-year in the first quarter to 3.9 billion euros ($4.4 billion), according to its Wednesday report, below the 4.01 billion euros forecast by LSEG analysts.

Gucci sales, which make up nearly half of total group revenues, fell 25% on a comparable basis to 1.57 billion euros, as an attempted turnaround of the brand remains underway.

Kering shares were down 5.1% by 8:25 a.m. London time, after trading of the stock was initially halted at the market open.

The company’s overall weakness was led by a 25% decline in group sales in Asia, as well as a 13% dip in both North America and Europe.

Kering Chairman and CEO François-Henri Pinault said the company had faced a “difficult start to the year” and highlighted further challenges ahead for the beleaguered luxury sector.

“In this environment, we are fully focused on executing on our action plans to reach our strategic and financial objectives and strengthen the positioning of our Houses on all our markets,” he said in a statement.

“We are increasing our vigilance to weather the macroeconomic headwinds our industry faces, and I am convinced that we will come out stronger from the present situation,” he added.

Kering last month named Demna Gvasalia as Gucci’s new artistic director, in its latest bid to turn around its ailing main label. The stock took a beating on the appointment, however, as investors fretted over controversy surrounding Gvasalia’s earlier work on a 2022 ad campaign at smaller KeringBalenciaga label.

Gucci has suffered several consecutive quarters of weak sales as its designs have fallen out of favor with shoppers and its high exposure to the Chinese consumer has seen it hard hit by a recent downturn in the once lucrative Asian market.

It comes amid a wider downturn in the luxury market over recent years amid higher inflation and weaker economic conditions.

That landscape appeared to be shifting at the turn of the year, with a slew high-end fashion houses reporting more upbeat fourth-quarter earnings. Nevertheless, analysts have previously warned that a tariff-induced macroeconomic slowdown could hinder that recovery going forward.

“Weaker global stock markets and the broader economic uncertainty will weigh on confidence and we see this further postponing a recovery in luxury demand,” Adam Cochrane, general retail and luxury equity research analyst at Deutsche Bank, wrote earlier this month.

Luxury brands had been expected to be more sheltered than other retailers from the immediate impact of tariffs, with high-end labels typically better able to pass on added costs to wealthy consumers. However, analysts noted that brands with already weak sales, including Kering, may be less placed to do so.

“We also note the brands may be slower to increase prices due to tariffs given weakening customer sentiment and general price elasticity, which is a key difference between Kering and LVMH (LVMH previously mentioned pricing as a main lever),”  TD Cowen wrote in a note Thursday.