French luxury group Kering reported a 14% drop in first-quarter revenues, falling to 3.9 billion euros ($4.4 billion), largely due to a further slump in sales at its flagship Gucci brand.

Gucci, which accounts for half of Kering’s total sales, continued to struggle, with sales falling 24% in the first three months of this year compared to the same period last year, when they had already dropped by 20%.

In 2023, Gucci sales overall dropped 23%, contributing to a sharp decline in net profits to 1.13 billion euros for the group, which also owns Yves Saint Laurent, Bottega Veneta, and Balenciaga.

"As we had anticipated, Kering faced a difficult start to the year," said CEO François-Henri Pinault in a statement. "We are increasing our vigilance to weather the macroeconomic headwinds our industry faces, and I am convinced that we will come out stronger from the present situation."

Concerning U.S. tariffs, "we consider that we have the capacity to protect our margins via price increases," Chief Financial Officer Armelle Poulou told journalists. "Today there are still enormous uncertainties so we're still working on that," she added.

While luxury goods might not face direct tariffs, a trade war could dampen consumer sentiment.

Sales in the Asia-Pacific region, a critical market for the luxury sector, saw a particularly sharp 25% decline.

Pinault had expressed confidence earlier this year that Kering could revive Gucci, even as he reshuffled top leadership. In March, Demna Gvasalia, formerly of Balenciaga, was appointed chief designer at Kering, replacing Sabato de Sarno, who lasted just two years in the role. However, the move failed to reassure markets, with Kering’s share price falling 11% the day after the announcement.

Kering's stock, which nearly hit 800 euros per share in 2021, closed at 174.94 euros on Wednesday.