Gucci owner Kering headed toward its worst day ever on the Paris stock market on Wednesday after it warned that it was expecting a sharp drop in sales in the first quarter.
Kering shares fell as much as 15.2 percent to 361.15 euros ($391.57) before clawing back some losses with a few hours left of trading.
The drop erased seven billion euros from Kering’s market value.
The share price plunge was worse than the those suffered in March 2020, at the start of the Covid pandemic, and during the global financial crisis in October 2008.
The group warned Tuesday that it was anticipating a 10-percent drop in sales in the first three months of the year compared to the first quarter of 2023, mainly due to Gucci’s poor performance in the Asia-Pacific region.
Kering, whose other brands include Yves Saint Laurent, Balenciaga and Bottega Veneta, will publish its first quarter sales on April 23 after the stock exchange closes.
In February, chief executive Francois-Henri Pinault vowed to press on with a strategy to put Gucci “back on track” after Kering announced a 17-percent fall in net profits in 2023.
However, Pinault warned that it “won’t happen overnight.”
Gucci, a brand famous for its leather handbags, accounts for half of Kering’s revenue. Its sales dropped six percent to 9.9 billion euros in 2023.
Kering changed Gucci’s top management last year, appointing deputy CEO and Pinault confidant Jean-Francois Palus to replace Marco Bizzarri, who had led the brand since 2015.
Sabato de Sarno succeeded Alessandro Michele as the brand’s creative director in January 2023 and the first items of his “Ancora” collection were made available in select stores in mid-February.
“The transition to a new Gucci is set to be tough,” said analysts at financial services group Oddo BHF.
Analysts at Jefferies noted that “the transition to the De Sarno signature remains in its early stages”.
