AMDK Luxury Group Cow Pah Cow Bu after lossing sales in Tiongkok

[k1976]

Gucci’s China Shock Reverberates Across the Luxury Landscape​

• Chinese more hesitant to make big purchases, Swatch CEO says
• Prada, Hermes are among groups bucking the slowing trend

A Gucci store in Shanghai.Photographer: Raul Ariano/Bloomberg
By Jennifer Creery, Shirley Zhao, and Andy Hoffman
March 24, 2024 at 1:00 PM GMT+8

Fears of a slowdown among Chinese shoppers have dogged the luxury industry for the better part of a year. Last week the scale of the problem hit home for one of fashion’s biggest but most exposed brands, Gucci.

French group Kering SA saw $9 billion wiped off its market value after warning that sales of the Italian label’s products in China have slumped this quarter. The slowdown is also starting to show up in other corners of the luxury industry.
https://www.bloomberg.com/tips/

 

[k1976]

https://www.businessoffashion.com/briefings/luxury/can-guccis-turnaround-plan-still-work/


Join BoF Professional today. Start your 30-day trial for just $1.
LUXURY

Can Gucci’s Turnaround Plan Still Work?​

This week, Kering flagged sales were down 20 percent at its flagship brand, knocking confidence in the group’s turnaround strategy. ‘A more drastic solution is required,’ one analyst wrote.

Gucci store interior. (Gucci)

By

• ROBERT WILLIAMS

22 March 2024

 

[k1976]

https://www.google.com/amp/s/amp.th...owner-kering-profit-warning-china-sales-slump

Gucci owner Kering issues profit warning after China sales slump​

Like-for-like sales at luxury goods group down by 10% in first quarter, weighed by nearly 20% fall at Gucci
Julia Kollewe
Wed 20 Mar 2024 04.58 EDT

• Share on Facebook
• Share on Twitter
• Share via Email

The French billionaire François-Henri Pinault’s luxury goods company, Kering, has issued a profit warning as demand dries up for its leading brand Gucci in China.

Unlike its rivals in the sector, which have fared better, the Paris-based company said like-for-like sales in the first quarter would drop by 10% year on year, while sales at Gucci were expected to fall by nearly 20%.

“This performance primarily reflects a steeper sales drop at Gucci, notably in the Asia-Pacific region,” said Kering, whose other luxury names include Saint Laurent, Balenciaga and Alexander McQueen. Kering shares fell 13.3% on on Wednesday after the profit warning.

 

[k1976]

Gucci accounts for about half of its parent firm’s revenues and two-thirds of its operating profit. The Italian fashion house is in the middle of a shake-up under new management and a new creative director, Sabato de Sarno.

The first items from de Sarno’s Ancora collection have been in some Gucci stores since mid-February, and Kering said they were “meeting with highly favourable reception” and “availability will gradually be ramped up over the coming months”.

Analysts at Jefferies, led by James Grzinic, said: “Kering’s warning largely reflects a sharp deterioration of Gucci’s resonance in Asia Pacific, and China in particular. This comes at a time when the transition to the De Sarno signature remains in its early stages. While a mixed Chinese yuan backdrop may have added an extra challenge, the news suggests a deeper trough.”

 

[k1976]

The Jefferies analysts said Gucci’s more classic, legacy products, such as leather handbags, failed to resonate with consumers, while the encouraging first reception for the first De Sarno product was “dwarfed by that tough headwind”. The new lines were likely to account for less than 5% of the total current offer in Gucci stores.

De Sarno unveiled clean-cut suits and chunky knitwear at his first menswear collection at Milan fashion week in January, heralding an era of pragmatism after nearly a decade of maximalism under his predecessor, Alessandro Michele.

Under Michele, Gucci has been popular with younger, so-called aspirational shoppers who are more vulnerable to economic pressures, unlike older, more affluent consumers.
The Bernstein analyst Luca Solca said the jury was still out on whether the Chinese would take to the “Sabato de Sarno quiet luxury”.

 

[k1976]

Kering’s other brands – it also owns Bottega Veneta, Boucheron and Brioni – have also been hit by lower demand. In contrast, the larger rival luxury groups LVMH, which owns Louis Vuitton, Dior and Tiffany, and the Birkin bag maker Hermès posted double-digit sales growth between October and December.

The global luxury market has slowed with consumer spending in China lagging behind the rest of the economy since the Covid outbreak in early 2020, amid a property crisis that has caused developers to declare bankruptcy or default on their debts.

About 70% of Chinese household wealth is invested in property.

 

[k1976]

Gucci and Saint Laurent owner Kering follows Burberry in issuing a rare profit warning as luxury sales in Asia stall​

Revenue for Gucci, which accounts for half of Kering's annual sales, could drop 20% year-over-year in the first quarter, Kering warned.​

BY
PRARTHANA PRAKASH
March 20, 2024 8:03 AM EDT

Kering, the Gucci owner, flagged declining luxury sales at the start of this year. Horacio Villalobos—Corbis/Getty Images

The luxury boom of the pandemic era has turned into a bust, hurting some of the industry’s most prominent players.


https://www.google.com/amp/s/fortun...urberry-profit-warning-luxury-sales-asia/amp/

 

[k1976]

The luxury slowdown has been widely discussed, and many examples of the trend have emerged. Demand from Chinese shoppers has been a shared trouble for all luxury brands as they were banking on the rebound of its economy to spur more high-end spending. That hasn’t played out like brands had hoped, although there are initial signs of recovery.

Asia’s luxury appetite aside, big players, including French conglomerate LVMH and bag maker Hermes, have managed to defy a slump after initial stumbles. But others haven’t fared nearly as well.

Take Burberry, for example—the British trench-coat company has seen sales dip in recent times. In January, it lowered its full-year profit forecast after seeing lackluster demand during the peak holiday season, when luxury sales are typically booming. Kering’s warning reaffirms that the luxury industry is still miles away from seeing a recovery—let alone another boom.