Kering blamed a steeper-than-expected sales drop at Gucci in the Asia-Pacific region. The fashion group has been trying to revitalise the Italian label that accounts for about two-thirds of its profit,so far without success. The warning will likely prompt renewed speculation over how Kering might lessen its reliance on a brand known for flamboyant designs that are out of step with the current trend toward understatement.
Controlled by the billionaire Pinault family,Kering has struggled to keep up with rivals like LVMH Moet Hennessy Louis Vuitton and Hermes International as luxury sales have cooled over the past year,especially in China. LVMH’s broader brand portfolio and Hermes’s long waiting lists for handbags have made those companies more resilient.
“Gucci has been encountering some company-specific problems for a few quarters,but this update will raise further worries about the state of consumer spending and China’s economy,” analysts at Vital Knowledge wrote in a note to clients.
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Kering’s pain comes amid a cooling market for high-end goods and in particular weak demand in China. The Asia-Pacific region,excluding Japan,made up 35 per cent of group revenue last year,more than Western Europe and North America. That’s slightly more than the 31 per cent at LVMH.
But Chinese consumers — once major buyers of global luxury goods — have been tightening their purse strings as a real estate crisis and job insecurityhurt confidence.
Overall,comparable sales at Kering,which also owns labels like Yves Saint Laurent and Balenciaga,will be down about 10 per cent for the period,the company said.