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Gucci Faces 20% Sales Decline As Asia’s Growth Slows

Sales at Gucci are anticipated to decline by 20% in the initial quarter, as acknowledged by its Paris-based parent company Kering, attributing the downturn to sluggishness in Asia.

This cautionary note stands in contrast to the steadfast performance of competitors LVMH and Hermès.

While the luxury market has enjoyed growth over the past decade, recent years have witnessed less impressive sales figures.

Gucci, which garners over a third of its sales from China, faces challenges amid the country’s economic slowdown.

Kering, in its statement, acknowledged the profit warning, citing a sharper decline in Gucci’s sales, particularly in the Asia-Pacific region. The company is set to disclose its financial results on April 23rd.

Gucci contributed two-thirds of the group’s operating income last year. Other brands under Kering’s umbrella include Yves Saint Laurent, Balenciaga, and Bottega Veneta.

Last month, Kering reported a 17% decline in net profit for the previous year. Its shares have plummeted by more than 23% over the past year.

In contrast, its larger counterpart, LVMH, owner of Louis Vuitton, Moët & Chandon, and Hennessy, exceeded sales expectations for 2023.

Hermès also celebrated record annual sales last year, announcing plans to grant bonuses to all employees worldwide.

While the results of LVMH and Hermès underscore resilience in the luxury market, Gucci, known for targeting younger, aspirational consumers, finds itself more susceptible to economic fluctuations.

Kering’s recent management reshuffle saw the appointment of Jean-François Palus as CEO and Sabato De Sarno as creative director of Gucci.

The Ancora collection, spearheaded by De Sarno, debuted in mid-February to an overwhelmingly positive reception, as per Kering’s statement.

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