No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Kering shares slid on Friday after it reported a fall in sales at luxury brand Gucci amid weak demand in Asia.
Group revenue was stable on a reported basis in the third quarter and down 1% on a comparable basis, to 3.34bn.
Meanwhile, sales at flagship brand Gucci fell 4% on a reported basis or 6% on a comparable basis to 1.29bn. Kering said the performance of Gucci reflected a more demanding comparison base and a less pronounced newness effect than in the second quarter.
"While traffic remained the main constraint, conversion, average price and average ticket improved further, supported by the progressive rollout of new collections," it said.
North America remained the most resilient market against a more demanding comparison base, while lower traffic weighed on Kering's performance in Asia Pacific, particularly in mainland China, and in Japan.
Chief executive Luca de Meo said: "Third-quarter revenue reflects the phasing we anticipated, in a softer macroeconomic environment.
"The recovery of Gucci remains our defining priority. We are steadily strengthening desirability and advancing our product development at pace. Reflecting the complementarity of our portfolio, Saint Laurent, Bottega Veneta and Brioni, as well as Kering Eyewear and Kering Jewelry, continue to extend their strong trajectory and we are doubling down on the renewal of Balenciaga and Alexander McQueen.
"Unlocking the group's full potential requires restoring momentum at Gucci, accelerating on product excellence, delivering our action plan in China, realising the full benefits of our group platform and embedding a culture of execution across the organisation."
At 1005 BST, Kering shares were down 11.5% at 189.04.
Danni Hewson, head of financial analysis at AJ Bell, said: "The concept that luxury stocks are supposed to be immune to ups and downs in the economy because its high-end clientele are untouched by such matters is being heavily tested of late, with Kering's third-quarter update the latest example.
"Kering has been out of fashion with investors for years and previous car industry executive Luca de Meo is the latest CEO tasked with steering the business back on course.
"His efforts have hit a serious speed bump as its flagship Gucci brand saw a sizeable drop in sales thanks to weak demand from Asia.
"It's little wonder de Meo has made reviving Gucci's fortunes a major priority. While the company reaffirmed its margin target alongside this latest update it tellingly did not mention a previous objective of returning to revenue growth in 2026.
"In the second quarter the company did increase sales for the first time in three years, but today's announcement suggests Kering's recovery might be starting to come apart at the seams."