• Friday, April 12, 2024

Business

Gucci sales hit by Asian economic slump, may fall by 20% in 2024 first quarter

Gucci is believed to get more than a third of its sales from China, whose economy has been struggling of late.

NEW YORK, NEW YORK – MARCH 20: People walk past the Gucci store on Fifth Avenue on March 20, 2024 in New York City. French luxury group Kering, owner of Gucci, had its shares drop 14% after the announced that Gucci sales are set to fall 20% year-on-year in Q1, amid declining Asia transactions. (Photo by Michael M. Santiago/Getty Images)

By: Twinkle Roy

KERING, a Paris-based global luxury group, has said that sales at Gucci are likely to plummet by 20 per cent in the first quarter of 2024 owing to a slowdown, particularly in the Asia-Pacific region.

The warning is in contradiction with rivals such as LVMH and Hermès, the sales of which have remained strong.

The luxury sector experienced growth over the past decade, but recent years have seen less impressive sales figures, BBC reported.

Gucci is believed to derive over one-third of its sales from China, a market facing economic challenges.

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In a statement, Kering said that the profit warning “reflects a steeper sales drop at Gucci, notably in the Asia-Pacific region”.

The company will report its financial results next month.

Last year, Gucci contributed to two-thirds of the group’s operating income. Kering’s portfolio also encompasses brands such as Yves Saint Laurent, Balenciaga, and Bottega Veneta.

Kering recently disclosed a 17 per cent decline in net profit for the previous year. Additionally, its shares have depreciated by over 23 per cent in the past year.

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Rivals LVMH and Hermès have reflected a steady and strong growth in profit and sales in 2023. Hermes even celebrated its record annual sales by rewarding its employees all across the globe with a bonus. For

LVMH owns Louis Vuitton, Moët & Chandon and Hennessy.

Gucci is known to target younger, ambitious shoppers who are more susceptible to economic challenges.

Last year, Kering brought changes in Gucci’s top management by appointing Jean-François Palus as its chief executive officer and Sabato De Sarno as its creative director.

The first items of Sarno’s Ancora collection were made available last month and it saw a “highly favourable reception,” Kering’s statement said.

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