Luxury, Kering plummets after earnings warning: sector falls on stock market

Strong declines at the opening of trading for the luxury sector, starting with Kering. In Paris, the stock of the French giant led by François-Henri Pinault, crashed 13.86% and trailed the entire sector after last night's profit warning, which was announced with the markets closed. The group announced a forecast of a drop in sales 'of around 10%' in the first quarter of 2024, compared to the first quarter of last year.

This performance, Kering explained, mainly reflects a sharper drop in Gucci's sales, particularly in the Asia-Pacific region, which would lose 20% in the first quarter year-on-year. The French giant will announce first quarter 2024 revenues on 23 April, at the close of the markets, but in the meantime the industry is in turmoil.

At Piazza Affari, Brunello Cucinelli at the start gave up 2.08% and Moncler marks -1.52%, after the Rivetti family, through its vehicle Grinta, sold 3.23 million Moncler shares at a discount to the last close. Also Salvatore Ferragamo trades negative at -2.64%.

According to Citi analysts, Kering may face a downward revision of consensus estimates, while the turnaround of its main brand Gucci may be slower than expected. Kering's warning is a rather worrying sign for the luxury sector. Consensus earnings estimates had already been cut after Kering said it expected EBIT to fall this year due to planned investments to reinvigorate Gucci and other brands, analysts say. Citi expects the consensus for EBIT and EPS for 2024 to be reduced by about 15 per cent due to Gucci alone.