Sales growth at Kering’s luxury brand Gucci experienced a significant slowdown in the second quarter of the year, with a growth rate of only 4%. In contrast, LVMH’s fashion and leather goods division, which includes renowned brands like Louis Vuitton and Dior, saw a substantial increase of 19% in sales. This decline in Gucci’s growth can be attributed to the implementation of new lockdown measures that severely affected revenues in the Chinese market, which is a crucial market for the brand.
Despite the challenges faced by Gucci, Kering’s overall sales reached 4.97 billion euros ($5.03 billion) in the second quarter, showing a 12% increase on a comparable basis. This exceeded market expectations, as analysts had predicted revenues of 4.44 billion euros. The strong performance of other brands within Kering’s portfolio, such as Saint Laurent and Bottega Veneta, helped to offset the slower growth of Gucci.
Jean-Marc Duplaix, the finance chief of Kering, acknowledged the impact of COVID-19 measures in the Chinese market, which led to the closure of approximately 35% of Gucci’s stores in April and May. However, he also noted some improvement in China during June, as movement restrictions were gradually lifted. In response to the challenges faced in the Chinese market, Kering is focused on reinforcing its Gucci management teams in China and maintaining investments such as store openings.
Despite the short-term difficulties, Kering remains optimistic about the long-term growth potential of the Chinese market. Duplaix emphasized the importance of the Chinese market for the company, stating that its growth potential remains intact in the long run.
The slowdown in Gucci’s sales growth in the second quarter highlights the ongoing challenges luxury brands face in navigating the impacts of the COVID-19 pandemic. The uncertainty caused by lockdowns and restrictions continues to disrupt consumer behavior and hinder sales performance. However, luxury brands like Kering are dedicated to adapting to this changing landscape and investing in key markets like China to drive future growth.
Sources:
– Reuters
– Business of Fashion
