Kering (EPA:PRTP) (OTC:PPRUY) shares fell more than 3% after the France-based luxury company said its sales fell 9% amid weaker demand for high-end clothing products.
As a result, Kering stock hit the lowest levels in three and a half years.
Kering reported an overall sales decline of 9%, which was more substantial than the expected 6% drop. Gucci experienced a roughly 7% drop in third-quarter sales.
In contrast, LVMH's (EPA:LVMH) fashion and leather goods division, which includes Louis Vuitton and Dior, achieved a 9% growth in sales during the same period. Hermes, known for its Birkin bags, outperformed with a notable 15.6% increase in sales.
Apart from Gucci, Kering's smaller brands, which had been enjoying strong growth until recently, also reported declines in the third quarter. Saint Laurent saw a 12% fall in revenues, and Bottega Veneta was down by 7%.
UBS analysts said the results were “as weak as expected.”
“Although the visibility remains limited and ST the company expects to reinvest more in its brands (e.g. Gucci EBIT margin now guided to -200bp y/y in 2023), the results didn't bring any negative surprise or anything new to "feed the bears",” said the analysts.
“We remain Neutral, awaiting more concrete signs of Gucci's top-line recovery and its EBIT margin stabilising.”