Shares of French luxury group Kering plunged 14% on Tuesday after the company warned that Gucci sales look set to fall 20% year-on-year in the first quarter, amid declining Asia transactions.

The rare profit warning forecasts overall group revenues to drop 10% in the first three months of 2024 on a comparable basis, setting the fashion house apart from other luxury lines LVMH and Hermes, which have remained resilient in the face of economic headwinds.

Kering plunged to the bottom of the Stoxx 600 after a delayed open, dragging other European luxury lines with it. Shares of LVMH, Christian Dior and Hermes all fell more than 2% in early deals, while Burberry was down 5.7%. Kering was down 14.3% by 8:30 a.m. London time.

“In a first half that Kering expected to be challenging, current trends lead the Group to estimate that its consolidated revenue in the first quarter of 2024 should decline by approximately 10% on a comparable basis, from last year’s first quarter,” Kering said in a statement.

“This performance primarily reflects a steeper sales drop at Gucci, notably in the Asia-Pacific region. Gucci comparable revenues in the first quarter are expected to be down by nearly 20% year on year.”

The slowdown is expected to derive primarily from Asia — and chiefly from China, whose economy has been struggling.

Claudia Panseri, UBS’s chief investment officer for France, said that the warning indicated continued headwinds in China amid wider macro pressures.

“China is probably a story which is a bit different,” Panseri told CNBC, comparing the country to the U.S. and European markets.

“We need more time to see consumer spending picking up. We need a stabilization of the real estate market. But, that said, there is also recovery of people traveling around the world, so that should add some fuel to the luxury goods story.  

Panseri added that she remains bullish on luxury goods overall, with the market accounting for a significant proportion of the bank’s exposure.

“We need to be probably more selective, clearly, just because valuation is not cheap. But the overall story is still there,” she said.

Gucci was once a darling of the Kering group, delivering strong results in 2021 that were driven by an early pandemic-era boom. The lavish fashion line has since struggled to retain share of market as even affluent consumers have tightened their belts amid higher inflation and shifted toward more “quiet luxury” brands.

Last month, Kering reported a 6% drop in fourth-quarter 2023 revenues, with sales also falling across all of its other major brands including Yves Saint Laurent, Balenciaga and Alexander McQueen. Gucci sales specifically were down 4% quarter on quarter.

CEO Francois Henri Pinault said at the time that the group would continue investing in its brands, including in Gucci, even if it meant reaping lower margins, according to Reuters.

Kering reshuffled Gucci’s senior leadership in 2023 as part of a wider overhaul strategy, appointing Jean-François Palus as CEO and Sabato De Sarno as its creative director.

In its note Tuesday, Kering said that De Sarno’s new Ancora collection, which was made available in mid-February, has been met with a “highly favourable reception.”

Kering will release its first-quarter 2024 revenue data on April 23.