Gucci’s sales for the first quarter of the year are expected to fall by 20% due to a slowdown in the Chinese market, French group Kering, owned by the Pinault family, which controls the famous brand, said.

Gucci’s sales warning contrasts with the picture presented by other famous brands such as LVMH and Hermès, whose turnover has remained “resilient”.

Despite the fact that the luxury goods market has strengthened significantly over the past decade, sales have not been particularly impressive in recent years.
According to the statement issued by the Kering group, the warning for Gucci’s revenue is related to the expected significant decrease in sales in the Asia-Pacific market. It is noted that one-third of Gucci’s revenue comes from the Chinese market, whose economy is facing problems.
On the other hand, the operating profits of the Kering group came by two-thirds from Gucci last year, while other brands in its portfolio are those of Yves Saint Laurent, Balenciaga and Bottega Veneta.

Last month the Kering group announced that its net profit for the previous year fell by 17%. In contrast, its biggest rival LVMH, which controls the Louis Vuitton, Moët & Chandon and Hennessy brands, reported higher-than-expected revenue for 2023. The picture was similar for Hermes, which celebrated its record annual revenue 2023, giving bonuses to all employees worldwide.

In the wake of the news, Kering Group shares plunged 12% on the French stock market, their biggest drop since March 2020, which resulted in €6.3 billion being wiped from the group’s market capitalisation.

The new “minimal” designer

It is recalled that last year, the Kering group made changes in the management of Gucci by assigning CEO duties to Jean-François Palus. Sabato De Sarno was also appointed as the brand’s new designer, who during his first collection last September in Milan presented a more minimalist aesthetic compared to the colorful patterns adopted by his predecessor Alessandro Michele. Pieces from this collection started arriving at Gucci stores just last month.