Sales at French luxury group Kering rose by just 1 percent in the first quarter, as star label Gucci benefited less than rivals from a rebound in China, and revenues fell sharply in the US.
Kering’s sales came in at €5.08 billion ($5.58 billion) for the three months to end-March.
The increase in comparable sales, which strip out the effect of currency fluctuations and acquisitions, was bang in line with analyst expectations.
But the pace of growth was well below that of competitors — Louis Vuitton owner LVMH grew sales by 17 percent and Birkin bag maker Hermès by 23 percent over the same period — and came after a 7 percent decline in the last quarter of 2022.
“Kering’s performance in the first quarter remained mixed,” chairman and chief executive officer François-Henri Pinault said in a statement, noting that trends had improved during the period.
In the Asia Pacific region, which is dominated by China and where Kering last year made a third of its sales, retail revenues grew by 10 percent as the end of Covid-19 lockdowns brought shoppers back into stores.
In the US, where LVMH had already flagged a slowdown for fashion and leather goods as younger, less wealthy shoppers splurge less on luxury as inflation bites, retail sales fell by 18 percent. The US market accounted for 27 percent of Kering’s total sales last year.
Gucci, once luxury’s fastest-growing brand and the group’s main profit and revenue driver, has been slowing down markedly in recent years and its creative director Alessandro Michele left last November.
His successor, little-known Sabato De Sarno, will join the group next month and present his first fashion show in September in Milan, leaving Gucci at risk of losing more momentum in sales and margins in the coming months as his collections will not hit the stores before next year.
“We cannot regain massively market share in a few weeks,” finance chief Jean-Marc Duplaix told analysts, saying the group was focusing on moving Gucci more upmarket, including by opening salons for the ultra-rich where prices start at $40,000.
“All the initiatives that we are pushing now will not pay off immediately.”
While smaller brand Yves Saint Laurent reported 8 percent growth during the period, the group’s other labels suffered.
Bottega Veneta’s sales were flat, while Kering’s “other houses” division — which includes Balenciaga, still reeling from a consumer backlash in the US and Britain over ads featuring children — saw a 9 percent decline in revenues.
By Silvia Aloisi and Mimosa Spencer; Editor Mark Potter
Gucci’s sales dropped 15 percent during the fourth-quarter while scandal-mired Balenciaga also stalled. Still, shares rose as investors rallied behind a bullish outlook for China.