Kering stock falls following profit warning; Gucci sales decline in China according to Investing.com

Kering stock falls following profit warning; Gucci sales decline in China according to Investing.com

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Investing.com – Shares of Kering fell on Wednesday, after the French luxury goods group issued a first-quarter profit warning, dragged down by weakness at its key Gucci brand in Asia.

At 10:15 a.m. ET (2:15 p.m. GMT), Dry the stock fell by almost 14% to €369.10 when it was listed in Paris.

Kering (EPA:) said its comparable sales would be down 10% in the first quarter, much worse than consensus expectations of a 3% decline, while

Gucci sales will be down nearly 20%, mainly due to weak trade in Asia.

The warning underscores the challenge Kering faces as it seeks to revive Gucci’s sales momentum, under the creative direction of Sabato de Sarno, given that the company accounts for half of the group’s sales and two-thirds of profits, while facing economic headwinds in key markets, particularly China.

“Weakness in Asia has been a recurring leitmotif of recent updates, as Chinese consumers have moved from ecstatic enthusiasm for Gucci at the start of the Alessandro Michele revolution to a sated attitude as Alessandro Michele becomes a yesterday’s story,” Bernstein analysts said. , in a note dated March 20.

“The jury is out on whether the Chinese will appreciate the quiet luxury of Sabato de Sarno.”

Bernstein maintained a ‘market perform’ recommendation on Kering, with a 12-month price target of €456.

“The bad news about Kering is company specific, but it is also a reminder that consumer confidence and discretionary spending in China are weak,” Bernstein added.

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