Less than a week after rival luxury conglomerate LVMH posted a strong first quarter of 2019, sending the stock to record highs, Kering barely matched expectations. Kering shares fell 6 percent on Thursday after signs of slowing growth from the Q1 earnings. And while watches and jewelry aren’t a large part of Kering’s business, the group’s earnings may point towards the general trend of slowed growth in luxury goods.

Part of the struggle for Kering, which owns luxury brands including Gucci, Yves Saint Laurent, and watch brands Girard-Perregaux, Boucheron, and Ulysse Nardin (see here for our brand guide), was the high expectations it had set for itself off of a strong 2018 and a generally strong luxury goods market.

Sales still rose 20 percent at Gucci, which makes up nearly three-quarters of the Kering’s total profit. Analysts honed in on a couple particularly worrisome dark spots: Gucci US decelerated to 5 percent organic sales growth and Bottega Veneta was back down at -9 percent, down more than in previous quarters after a short-lived improvement in Q4 18, JP Morgan pointed out in a note.

The group has had a strong couple of years under the leadership of Francois-Henri Pinault and new lead designer Alessandro Michele; Gucci has more than doubled in size over the past four years, so the fashion house said a slowdown should naturally be expected.

Unfortunately, Kering only breaks out sales of Gucci, Saint Laurent, and Bottega Veneta, so we can’t see how its watch business is doing. But, the group’s earnings report did say that it was “focused on sell-out and on prime distribution,” that “SIHH feedback was very positive,” and the implementation of synergies was well on track.” It also pointed to a particularly strong quarter from Boucheron as an earnings highlight.

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