Kering SA reported a worse-than-expected slump in sales at the Gucci luxury-goods brand amid a slowdown in Asia and signaled it will rebalance some prices as a weakening euro widens the differential between regions.
Comparable sales at the unit fell 7.9 percent in the first quarter, Paris-based Kering said Tuesday in a statement after markets closed, missing the median estimate for a 4 percent drop. Group sales met estimates, helped by a weaker euro and a stronger-than-anticipated performance by sportswear maker Puma.
Kering flagged in February that 2015 would be a year of transition for Gucci as it overhauls management and drops some wholesale clients among other steps to restore growth at the unit. Though comparable sales in Gucci’s directly operated stores gained in western Europe and were stable in the U.S. in the quarter, performances elsewhere were mixed, with Asia-Pacific falling 10 percent on the same basis, Chief Financial Officer Jean-Marc Duplaix said on a call to reporters.
“Our priority today is to give our flagship luxury brand fresh impetus and we are confident in the success of the action plans initiated by the new teams,” Chief Executive Officer Francois-Henri Pinault said in the sales statement. “We expect a gradual improvement in our performances throughout the year.”
Group revenue rose 11 percent to 2.65 billion euros ($2.85 billion), Kering said. Analysts predicted 2.64 billion euros, according to the median of estimates compiled by Bloomberg. On a comparable basis, sales fell 0.6 percent, trailing estimates for 1.8 percent growth.
Following a review, Kering may harmonize some prices globally, though any changes will be on a case-by-case basis, CFO Duplaix said. Some adjustments have already been made at handbag maker Bottega Veneta, which raised some prices in Europe and decreased them in Asia this month, Group Managing Director Jean-Francois Palus added.
In doing so, Kering joins companies including Chanel responding to a growing pricing differential between regions caused by the weakness of the euro. While companies including Gianni Versace SpA and Burberry Group Plc have signaled they may follow suit, LVMH Moet Hennessy Louis Vuitton SE said this month it would delay any decision until currency rates stabilize.