Gucci, the renowned fashion brand owned by French luxury group Kering, faced a slower sales growth in the third quarter of 2021, particularly in Asia. The brand experienced a mere 3.8% increase in sales, which fell short of analyst expectations. It is worth noting that Gucci had showcased a robust recovery in the second quarter after being severely impacted by the COVID-19 pandemic.
Major luxury goods companies have witnessed a rebound in sales as lockdown measures ease and consumers resume their shopping habits. However, sales from traveling tourists, a prominent revenue source for the sector, continue to lag behind pre-pandemic levels.
On a comparable basis, Kering’s overall sales saw a modest increase of 12.2%, surpassing the analyst consensus forecast of an 11% rise. The United States and western Europe exhibited strong performance, but the reemergence of COVID-19 cases in the Asia-Pacific region, particularly in late July and August, adversely affected revenue in that area. Gucci experienced a decline of 3% in sales specifically in Asia.
Gucci, responsible for more than half of Kering’s annual sales, has relatively lost momentum compared to some of its competitors, despite enjoying exceptional growth in previous years. This has made it the primary focus for investors. Analysts had predicted a 9% increase in Gucci’s revenue in the third quarter, following an impressive 86% surge in the previous quarter. In contrast, LVMH’s fashion and leather goods division, which encompasses popular brands like Louis Vuitton and Dior, reported a remarkable 24% increase in third-quarter sales.
Jean-Marc Duplaix, Kering’s finance chief, expressed confidence in Gucci’s growth prospects for the fourth quarter. The brand’s new Aria collection, offering a wider range of products compared to previous collections, was launched in late September and received positive feedback globally. Duplaix asserted that the group anticipates a strong end to the year. However, investments in events, communication, stores, and recruitment to support the brand will impact its margin growth in the second half of the year.
Smaller fashion labels under the Kering umbrella, such as Yves Saint Laurent and Bottega Veneta, experienced robust sales growth, mainly in North America and Europe. However, their performance in the Asia-Pacific region was relatively subdued. Asia, especially China, has been a significant driver of growth for the luxury sector. Investors are closely monitoring China’s government measures to narrow the wealth gap and the country’s slower economic growth, as these factors could potentially impact the demand for high-end goods.
Overall, the luxury industry is navigating a complex landscape as it aims to recover from the pandemic’s impact. While sales are gradually bouncing back in some regions, challenges persist, particularly in Asian markets. Companies like Gucci and Kering are working towards regaining momentum and meeting the evolving demands of consumers.
For more information on the luxury goods industry and its recovery, you can visit the following links:
1. Business of Fashion
2. Vogue Business
