Kering's shares dropped 12% after it reported that sales at Gucci have fallen about 20 per cent in the first quarter.
👉 Background: Gucci, the Italian luxury fashion brand owned by Kering has been struggling to keep up with its competitors. Two years ago, Kering began a management shuffle at Gucci by naming a new fashion head in China and Hong Kong.
👉 What happened: This week, Kering's shares dropped 12% after it reported that sales at Gucci have fallen about 20 per cent in the first quarter - wiping $10.5 billion from Kering's market capitalisation.
👉 What else: Kering blamed Gucci's sales drop on the Asia-Pacific region, where sales have dropped, particularly as China has been hit hard with a real estate crisis and job insecurity.
💡In retail, and especially luxury, brands ride the economy’s inevitable ups and downs. However, some suffer more than others.
💡Kering's pain is as a result of a softening market for luxury goods in China. In fact, the Asia-Pacific region (excluding Japan) made up 35% of group revenue last year for Kering - more than Western Europe and North America.
💡Kering also owns labels like Yves Saint Laurent and Balenciaga, whose sales will be down about 10% as it battles to keep up with competitors like LVMH and Hermes, who have been more resilient during the luxury sales slowdown.
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