Asia’s Downturn will Cause a 20% Decline in Gucci Sales

Gucci’s sales are projected to decline by 20% in the first quarter as a result of a slowdown in Asia, as reported by its Paris-based owner Kering.

In contrast to its competitors LVMH and Hermès, the company’s sales have not fared as well.

The luxury market has experienced significant growth over the past decade, although sales have not been as remarkable in recent years.

Gucci is projected to receive over one-third of its sales from China, a country that has been facing economic challenges.

Kering stated that the profit warning is a result of a more significant decline in sales at Gucci, particularly in the Asia-Pacific area. The firm has a scheduled date to release its financial results on 23 April.

Last year, Gucci contributed significantly to the group’s operating income. Kering also owns other prestigious brands such as Yves Saint Laurent, Balenciaga, and Bottega Veneta.

In the previous month, Kering announced a 17% decrease in its net profit for the past year. The company’s shares have experienced a significant decline of over 23% in the past year.

On the other hand, LVMH, the larger competitor that owns Louis Vuitton, Moët & Chandon, and Hennessy, reported sales for 2023 that exceeded expectations.

Hermes also marked its exceptional annual sales last year by announcing plans to provide a bonus to all employees across the globe.

Although Gucci’s performance in the luxury market remains strong, the brand focuses on attracting younger, ambitious customers who may be more susceptible to economic fluctuations.

In a significant move, Kering made a shift in Gucci’s leadership last year. Jean-François Palus was appointed as the chief executive officer, while Sabato De Sarno took on the role of creative director.

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The initial pieces of his Ancora collection were released in mid-February.

The collection has received a very positive response, according to Kering’s statement.

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