Kering, the parent of Gucci and other luxury brands, noted that sales of Gucci goods will decline in the first quarter of the year. Gucci’s Asian luxury goods sales are expected to fall by about 20 percent yearly. This Tuesday’s announcement led to a decline in the stock value of other European luxury goods companies as they followed suit.
Kering saw the most significant plunge, 14.3 percent, on the Stoxx 600 at 8.30 a.m. GMT (London time). LVMH, Christian Dior, and Hermes fell by 2 percent, but Burberry saw a more significant fall of 5.7 percent.
Kering also said its group revenues will fall by 10 percent in the first quarter 2024. Kering lost about $8.6 billion in market capitalization. The parent includes brands such as Gucci, Alexander McQueen, Saint Laurent, Bucheron, Balenciaga, and others.
Other luxury brands, including LVMH, Christian Dior, Hermes, and Burberry, also saw a decline in share price, similar to a domino effect as luxury retail has seen a slowdown post-pandemic. People are more interested in spending their dollars on travel, tourism, and dining activities.
The Asian market, led by China, has slowly fizzled out compared to the high sales during the pandemic. Consumers are also slowly adopting quiet luxury, where sales are better than those of high fashion brands that ruled these past years.
Kering has lost about one-third of its value in the past year. Only Burberry has performed lower in the luxury goods market. LVMH has seen some brands perform well while others have not. Hermes is the only luxury brand with a good gain this past year. The share price of the exclusive bag and scarf maker saw a 34 percent gain.
Kering has begun a design overhaul under Sabato de Sarno. It is moving from over-the-top designs to quieter, sleek styles, and whether the Kering brands can recapture some of the lost market share remains to be seen.
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