French luxury group Kering said first-quarter revenue fell 14% to 3.9 billion euros ($4.4 billion) as sales at its flagship Gucci brand fell further.
Kering has been working to turn around Gucci, which accounts for half of group sales, but sales fell 24% in the first three months of this year compared with the same period last year, after falling by a fifth.
Last year, sales at Gucci as a whole fell 23%, leading to a sharp drop in net profit to 1.13 billion euros for the group, which also owns Yves Saint Laurent, Bottega Veneta and Balenciaga.
“As we expected, Kering had a difficult start to the year,” Kering Chief Executive Francois-Henri Pinault said in a statement.
“We are on high alert to address the macroeconomic headwinds facing our industry and I am confident that we will emerge stronger from the current situation,” he added.
Regarding U.S. tariffs, “we believe we have the ability to protect our margins by raising prices,” Chief Financial Officer Armelle Poulou told reporters.
“Today there is still huge uncertainty, so we are still working through this,” she added.
Even if punitive tariffs don’t hit luxury goods directly, the trade war could dampen consumer sentiment. Sales in the Asia-Pacific region, a key region for the luxury industry, fell particularly hard, by 25%.
Earlier this year, Pinault expressed confidence that Kering could turn around Gucci and had made changes to its senior leadership.
In March, Kering named Demna Gvasalia of the Balenciaga brand as chief designer, replacing Sabato de Sarno, who had been in the job for just two years.
The appointment failed to convince the market, and Kering shares fell 11% the next day. The company’s shares came close to reaching 800 euros per share in 2021, but closed at 174.94 euros on Wednesday.