Gucci sales fell 8% on the back of the war. This is the second alarm signal for the luxury sector

Gucci sales fell sharply in the first quarter as the war in the Middle East put pressure on the already struggling flagship brand of the Kering Group. And the decline was almost twice as severe as analysts had anticipated. The negative results of Kering and LVMH diminish hopes for a recovery of the luxury market after a number of crisis years.

Gucci's comparable sales fell 8 percent in the first quarter, Kering said Tuesday, April 14, with analysts expecting a 4.3 percent decline, Bloomberg wrote.

The war in the Middle East had a negative impact on Kering's total sales of about 1 percentage point, Kering CFO Armelle Pulu said in a Bloomberg statement. A day earlier, LVMH, owner of the Louis Vuitton and Christian Dior brands, reported similar losses. Kering's retail revenue in the region fell 11% in the quarter, although it grew in the first two months of the year before the war began. The Middle East brings Kering about 5% of total retail revenue.

Kering's total revenue for the first quarter was €3.57 billion, down 6% year-on-year. Revenue from Kering's own retail network, including online sales, decreased by 2% and remained uneven across regions and brands.

Kering shares are traded in Paris: the stock exchange there closed on Tuesday before the publication of the company's reports. Kering's shares rose almost 3% on the day, despite weak LVMH reports - on the wave of market hopes for a settlement of the war in the Middle East. Kering is now 7% cheaper than it was at the beginning of 2026. By comparison, the quotes of LVMH fell by 25% over the same period.

Kering's receipts were 0.6% cheaper on the over-the-counter market in the U.S. on April 14.

Over the past year, both Kering and Gucci have undergone major changes. Renault top manager Luca de Meo was appointed CEO of Kering, Gucci also got a new head, and famous designer Demna Gvasalia, who previously worked at Balenciaga, became creative director of the Italian brand. Since taking up the position in September, de Meo has made quick personnel changes and accelerated the launch of collections in stores. For example, some of the items presented at the first Gucci show under Demna's leadership in Milan in February went on sale immediately after the show.

"Gucci remains our top priority. The company is undergoing a major transformation with decisive measures in customer relations, distribution and, above all, product offering," de Meo said, he was quoted as saying in the report.

Controlled by billionaire François Pinault's family, Kering has lagged behind rivals in recent years as Gucci products have been losing popularity, Bloomberg noted. The brand's success is critical to the group as it accounts for about 60% of Kering's profits. Analysts are now waiting for the first investor day led by de Meo, which will be held on Thursday, April 16, in Florence, the city where Gucci was founded in 1921.

"To take a more positive stance [on Kering shares], we need signs of renewed interest in the Gucci brand, which could take additional time given the macroeconomic environment and the state of the industry," Bloomberg quoted RBC analyst Piral Dadania as saying in a note.

LVMH on April 13 reported that organic revenue at its key fashion and leather goods division LVMH fell 2% in the first quarter. Analysts had expected a decline of only 0.05%.

LVMH, given the scale of its business and the size of its portfolio of premium brands, is considered by investors and market participants as an indicator of the state of the entire industry, wrote Bloomberg. The LVMH report will increase investor concern about the war in the Middle East and its impact on the luxury goods market, which had begun to emerge from the crisis before the fighting began, Reuters noted.

This article was AI-translated and verified by a human editor