Gucci owner Kering tanks 14% after Asia profit warning, dragging down Europe luxury brands

Shares of French luxury group Kering plunged 14% on Tuesday after the company warned that Gucci sales look set to fall 20% year-on-year in the first quarter, amid declining Asia transactions.

The rare profit warning forecasts overall group revenues to drop 10% in the first three months of 2024 on a comparable basis, setting the fashion house apart from other luxury lines LVMH and Hermes, which have remained resilient in the face of economic headwinds.

Kering plunged to the bottom of the Stoxx 600 after a delayed open, dragging other European luxury lines with it. Shares of LVMH, Christian Dior and Hermes all fell more than 2% in early deals, while Burberry was down 5.7%. Kering was down 14.3% by 8:30 a.m. London time.

"In a first half that Kering expected to be challenging, current trends lead the Group to estimate that its consolidated revenue in the first quarter of 2024 should decline by approximately 10% on a comparable basis, from last year's first quarter," Kering said in a statement.

"This performance primarily reflects a steeper sales drop at Gucci, notably in the Asia-Pacific region. Gucci comparable revenues in the first quarter are expected to be down by nearly 20% year on year."

The slowdown is expected to derive primarily from Asia — and chiefly from China, whose economy has been struggling.

Claudia Panseri, UBS's chief investment officer for France, said that the warning indicated continued headwinds in China amid wider macro pressures.

"China is probably a story which is a bit different," Panseri told CNBC, comparing the country to the U.S. and European markets.

"We need more time to see consumer spending picking up. We need a stabilization of the real estate market. But, that said, there is also recovery of