Luxury conglomerate Kering faces a major hurdle as sales at its flagship brand, Gucci, plunged 8 percent organically in the first quarter. This steep decline represents a significant setback for new Chief Executive Luca de Meo, who is attempting to engineer a comprehensive turnaround at the Paris-listed group. Investors will scrutinize the effectiveness of recent creative appointments.

Gucci’s performance fell well short of analyst expectations, which had pegged the decline closer to 4.7 percent. The brand, which generates roughly 60 percent of Kering’s profit, is battling severe headwinds in China, where group sales dropped by a mid-teens percentage. Geopolitical tensions further complicated matters, as the conflict involving Iran caused an 11 percent reduction in Middle East retail sales for Kering.

Despite the core brand weakness, Kering maintained overall revenues at €3.57bn, buoyed by strong jewelry and eyewear sales across its portfolio, which includes Saint Laurent. De Meo has already moved to streamline the business, notably by agreeing to sell its beauty division to L’Oreal for €4bn earlier this year. He is set to unveil his full revival strategy shortly.

Questions persist over whether the new creative direction under Demna can quickly reverse two consecutive years of double-digit revenue contraction at the Italian house. Competitors like LVMH have managed to report improving sales trends in the crucial Chinese market.