Gucci-owner Kering SA (EPA:KER) has made a substantial cut to its full-year income forecasts following a disappointing third quarter.
Gucci’s year-on-year revenue plummeted 26% in the quarter, driven predominantly by persistently soft China demand.
Yves Saint Laurent also faced difficulties, with third-quarter revenue down 13%, while Bottega Veneta showed more resilience, with a 4% rise in reported revenue, driven by strong sales in North America and Western Europe.
Considering that “major uncertainties likely to weigh on demand among luxury consumers in the coming months”, Kering predicts that recurring operating income for the full year could be as low as €2.5 billion.
Kering has previously guided full-year recurring operating income closer to €3.5 billion.
Chairman and chief executive François-Henri Pinault said: “With discipline and determination, we are executing a far-reaching transformation of the group, and at Gucci in particular, at a time when the whole luxury sector faces unfavourable market conditions.
“This severely impacts our performances in the short term. Our absolute priority is to build the conditions for a return to sound, sustainable growth, while further tightening control over our costs and the selectivity of our investments.”
Kering’s shares on the French bourse only fell 0.5% following this announcement, although they have already plummeted more than 40% year to date.