Kering Reports Gucci Sales Drop Amid Luxury Sector Volatility
Kering reports a 6% sales decline for Gucci and launches a five-year restructuring plan as the broader luxury market faces cooling demand.
The luxury group Kering reported a 6% decline in third-quarter sales for its flagship brand Gucci, with revenue totaling €1.29 billion. The company attributed the drop to falling store footfall and weak consumer demand in China. Total group revenue fell by 1% when adjusted for currency fluctuations.
To address the downturn, Kering is executing a five-year plan led by CEO Luca De Meo. The strategy aims to double operating profit margins through supply chain streamlining, cost reductions, and the closure of approximately 125 stores by the end of the year. Chief Finance Officer Armelle Poulou stated that the company continues to carry out this plan with the utmost discipline while increasing marketing spending.
Broader volatility is affecting other luxury players, including Hermes. The company has seen a significant drop in the resale value of Birkin bags, with some second-hand prices falling over $6,000 from 2022 peaks. Following a downgrade to sell by UBS analysts, Hermes shares have lost nearly 40% of their market value this year.
