Gucci Forecasts 20% Decrease in Sales Amidst Asia Economic Slowdown
Kering, the Paris-based owner of Gucci, has issued a warning indicating an expected 20% decline in sales for the luxury brand in the first quarter, primarily attributed to a slowdown in Asia. This announcement contrasts with the resilient sales reported by rivals such as LVMH and Hermès.
Despite a decade of growth in the luxury market, recent years have seen less impressive sales performance. Gucci, which heavily relies on sales from China, is particularly affected by the struggling economy in the region.
According to Kering, the profit warning reflects a significant drop in sales at Gucci, particularly in the Asia-Pacific region. Gucci contributes two-thirds of Kering’s group operating income, alongside other renowned brands like Yves Saint Laurent, Balenciaga, and Bottega Veneta.
Kering is set to report its financial results on April 23rd, with Gucci’s performance closely watched due to its substantial impact on the group’s overall profitability.
While Kering reported a 17% decline in net profit last year, its rival LVMH posted higher-than-expected sales for 2023. Similarly, Hermès celebrated record annual sales, planning to reward all employees worldwide with a bonus.
Gucci’s target market comprises younger, aspirational shoppers who may be more susceptible to economic pressures. In response to market challenges, Kering implemented management changes at Gucci, appointing Jean-François Palus as CEO and Sabato De Sarno as creative director.
The recent Ancora collection, introduced in mid-February under the new management, has garnered a highly favorable reception, according to Kering’s statement. However, the brand remains vigilant amidst economic uncertainties, aiming to navigate the luxury market landscape effectively.
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