Gucci sales fell 8% in the first quarter. The decline adds pressure on CEO Luca de Meo's turnaround plan.

Quarterly hit: numbers and immediate causes

Gucci posted 1.35 billion euros ($1.59 billion) in sales from January through March, down 8% from the same period a year earlier, the company said on Tuesday. That's the brand's 11th straight quarterly decline and leaves the business far below the levels seen in 2023; sales are roughly half of last year's peak for the brand.

Retail receipts from the Middle East were especially weak. Kering reported an 11% drop in Middle East retail revenue in the quarter, a slump executives linked to the war in Iran and the sharp fall in international travel that followed the outbreak of hostilities on February 28.

Armelle Poulou, Kering's finance chief, estimated the conflict wiped about 3 percentage points off Kering's overall sales in March and roughly 1 point for the quarter as a whole. Visible Alpha, an analyst-data provider, had expected Gucci's quarterly revenue near 1.37 billion euros — a small miss that confirmed expectations for a rough start to the year.

Look, the region matters. Wealthy Middle East buyers and international tourists have been a key revenue source for luxury groups, and lost spending there hit Gucci particularly hard.

Turnaround on the line as de Meo prepares plan

The results come just days before Luca de Meo, Kering's CEO, is due to present a strategic plan aimed at reviving the group's performance. Investors have been waiting for a clear roadmap for months.

Thing is, expectations are high but the task is steep. Kering confirmed it's still targeting a return to full-year growth for Gucci, with analysts largely betting on a rebound in the third quarter, but the brand's recent form underlines how fragile any recovery could be.

De Meo inherited a business that has seen rapid changes in leadership and creative direction. That churn, coupled with aggressive price increases and shifts in product aesthetics, has alienated some customers — a dynamic industry watchers say has left Gucci vulnerable.

What changed inside Gucci — creative shifts and product moves

Gucci has pushed through a series of bold creative moves since the management reshuffle last year. The first collections from Demna, the Georgian designer who moved from another label inside Kering, reached stores in recent months. Executives and investors are pinning hopes on those pieces sparking renewed consumer interest.

But new designs take time to land with shoppers, and the early sales figures suggest any uplift from Demna's work hasn't yet offset the drop caused by weaker travel and regional spending. The brand's slump has been deep: sales have now been falling quarter after quarter, and the swing from 2023 is dramatic.

Gucci's struggles have been a drag on Kering's heritage. Once the group's engine of profit growth, Gucci's slide has forced management to rethink merchandising, pricing and store strategies.

Kering's wider performance — jewellery and eyewear help

While Gucci weakened, Kering's overall group sales were essentially flat year-on-year when adjusted for currency moves. That outcome beat analyst expectations for a mid-single-digit decline, helped by stronger returns from jewellery and eyewear divisions.

Those smaller but faster-growing categories softened the blow. Kering said jewellery and eyewear performance helped offset parts of the Gucci weakness, allowing the group's headline sales to avoid a steeper fall.

Still, investors have pushed Kering shares lower; the stock is down about 8% so far this year. The drop reflects both the direct hit to Gucci and wider market jitters about how quickly the company can reset the brand's fortunes under de Meo's leadership.

Regional and travel effects: how much was lost?

Poulou's estimate that the Iran war shaved 3 percentage points from March sales gives a sense of the immediate economic impact. That shock translated into roughly a 1-point drag over the quarter, she said, but it was enough to tip a marginal quarter into a decline.

The Middle East is a major luxury market and international travel patterns feed high-street and airport spending. When tourists stay away or rich clients cut back, the numbers move fast. The timing — with the conflict beginning late in February — meant two months of normal trading followed by a sharp drop in March.

That mix made it harder for Gucci to rely on an early-year rebound, and underlines why de Meo's plan will need to address both near-term traffic issues and longer-term brand strategy.

Investor expectations and market reaction

Analysts and investors have said they want to see a clear set of actions from de Meo: product clarity, smarter pricing, and better merchandising. Visible Alpha's consensus placed the quarter slightly higher than Gucci delivered, and that miss fed more caution among market participants.

For the Pinault family, which controls Kering, the stakes are large. The group is valued at tens of billions of euros, and Gucci has been its principal profit engine for years. Bringing the brand back to growth is pivotal not just for the label but for the owner's broader strategy.

Management insists it remains committed to turning the brand around. Kering described the quarterly outcome as a "first step" in its recovery and said it still aims for full-year growth at Gucci.

What to watch next

Right now, the key near-term moments are clear. De Meo's strategic announcement will be scrutinized line-by-line for signals on store expansion, pricing policy, inventory control and creative direction. Quarterly comparisons will become easier from the second half of the year only if demand stabilizes.

Reports on March and April trading, early reactions to Demna's collections and updates from the jewellery and eyewear teams will give investors fresh clues.

Bottom line: the recovery is supposed to start now. But the math is challenging — lost tour group sales and a very public run of quarterly declines mean the company needs both immediate fixes and patient execution.

Related Articles

Kering called the quarterly outcome a "first step" in its recovery.