MILAN/PARIS, April 24 (Reuters) - Shares in French luxury group Kering fell 8.5% in early trade on Wednesday, after the company said it expected a 40%-45% plunge in first-half operating profit.
First-quarter sales at Kering declined 10% as wealthy shoppers curbed spending on products from its star label Gucci.
The revenue decline and investment needed in the brand will hurt first-half profits, with Gucci not seeing much improvement in the second quarter, company executives told analysts after reporting results on Tuesday.
Kering had warned on March 19 that sales over the period were likely to drop by around 10%, dashing hopes it had stemmed sales declines at Gucci, the century-old Italian fashion house which accounts for half of group sales and two-thirds of profit.
Analysts at JPMorgan said that while management is still positive about expected margin recovery in the second half as a new Gucci collection becomes more available, the execution risk was high.
"We think it is too early to turn more constructive on this turnaround journey," they said.
Reporting by Danilo Masoni and Dominique Patton; Editing by Alun John and Muralikumar Anantharaman
Source: Reuters