Gucci sales drop as luxury retail slump continues

Luxury conglomerate Kering, which also counts Alexander McQueen and Balenciaga among its stable of brands, saw its Q2 sales drop by 15% year on year on a comparable basis.

This equated to earnings of €3.7bn (£3.2bn), below the €3.96bn (£3.43) forecast set out by London Stock Exchange Group analysts.

It comes after longtime rival LVMH, which owns Louis Vuitton and Dior, posted a 9% decline in its fashion and leather goods division in the second quarter.

Both companies are facing challenging situations in China, where luxury sales have slowed sharply, and in the US, where goods dispatched from Europe are now set to attract a 15% tariff.

Sales were down by double digits in every major region. European sales dropped by 17%, which Kering attributed to a decline in tourism.

Bright spots were Bottega Veneta and the company’s eyewear division, where sales grew by 2% and 3% respectively, on a comparable basis.

Kering announced earlier this year that Renault boss Luca De Meo would be installed as chief executive, replacing François-Henri Pinault, who will remain as chair of the board of directors.

Pinault said: “Though the numbers we are reporting remain well below our potential, we are certain that our comprehensive efforts of the past two years have set healthy foundations for the next stages in Kering’s development.”

Another change announced earlier this year was the installation of Demna Gvasalia, longtime creative director of Balenciaga, as the new creative lead at Gucci. He replaced Sabato De Sarno, who left after a two-year stint in the role.