Gucci Sales Plunge 25% as Kering Woes Continue

Gucci sales plunged as shoppers turned away from Kering SA’s largest brand that’s undergoing a second design revamp in three years.

Revenue at the Italian label dropped 25 percent in the second quarter on a comparable basis, Kering said in a statement Tuesday, matching analysts’ estimates. Overall, Kering’s sales tumbled 15 percent, also in line with expectations.

Gucci has suffered more than most peers from a luxury industry slowdown, leading to turmoil at the brand and at Kering more broadly. Gucci’s new artistic director Demna Gvasalia — formerly of Balenciaga — has yet to unveil his debut collection after his predecessor lasted only about two years in the job.

Kering is also beginning a new era with the scheduled arrival in mid-September of Chief Executive Officer Luca de Meo, who previously held the same role at automaker Renault SA. Francois-Henri Pinault, son of Kering’s billionaire founder Francois Pinault, will stay on as chairman after handing over the CEO reins when De Meo arrives.

Since De Meo’s appointment last month, shares of Kering have rebounded by almost a quarter on hopes he’ll succeed in turning around the luxury group as he did Renault. The stock is still down about 11 percent this year.

Kering’s first-half recurring operating income fell 39 percent to €969 million. Analysts were expecting €934.9 million.

The US’s 15 percent tariff on goods from the European Union is “totally manageable” for the company, Chief Financial Officer Armelle Poulou told reporters on a call. The group applied some price increases in the second quarter and may consider further “measured” increases in the autumn, she said.

While the demand downturn for luxury goods has deepened, Gucci’s popularity started waning before the macroeconomic picture darkened. Former designer Alessandro Michele, who oversaw a period of strong growth, left almost three years ago when shoppers tired of his exuberant and bold creations.

By Angelina Rascouet