Shares in Gucci owner Kering (PRTP.PA) fell sharply in early trade on Thursday after the French luxury goods group reported a bigger-than-expected drop in second-quarter sales and warned of a weak second half on subdued demand in China.
Kering shares were down 7.7% to 277.45 euros at 0801 GMT amid a wider shares sell-off, hitting their lowest level since August 2017. Shares had already fallen to their lowest level in seven years earlier this week.
Investors are concerned about a lack of visibility for the luxury sector in the coming months, beyond the easing of comparative figures. Appetite in China is a key concern with China's post-pandemic lockdown bounce having tapered off a year ago.
On Tuesday, LVMH (LVMH.PA) missed quarterly results expectations as sales rose 1% and offered little prospect of a pickup soon.
Analysts at JPMorgan said that while Kering's report added "limited incremental read-across to the rest of the sector" it "definitely does confirm that trends remain tough for the space overall, and in particular for turnaround stories in the
making."
Kering's efforts to revive sales at its key label Gucci have been complicated by the global luxury market downturn, with China's rebound - traditionally Gucci's most coveted market - clouded by a property crisis and high youth unemployment.
Western markets have also slowed after a post-pandemic spending spree.
"The hope that Kering had kitchen-sinked expectations enough turned out to be misplaced. Whilst the Gucci (and broader group) elevation journey continues, it seems to be delayed by accelerating footfall challenges," Jefferies analysts wrote in a note, adding they were cutting estimates by 18% for 2024 and 7% for 2025.
