The shares of the owner of Gucci and Yves Saint Laurent fell by 15% - the most in the last 30 years
The reason was a drop in Gucci sales due to a new approach to style from the creative director
The capitalisation of the French Kering group (Gucci, Balenciaga, Yves Saint Laurent) fell by 15% or €7.2 billion. The reason was the news that Gucci's sales fell by 20% in the first quarter. This is the largest intraday drop in the last 30 years of Kering's history, Bloomberg reports.
According to experts, the main factor behind the current failure was the same thing that supported the luxury sector during the pandemic: Chinese demand.
Gucci, which accounts for two-thirds of the Pino family's profits, has failed to strengthen the brand in Asia. It's not only China's economic problems that have affected demand, but also a collection that is too provocative in these times, Bloomberg notes.
Competitors LVMH and Hermes are doing better due to a broad portfolio and a unique product (luxury bags), respectively.
In addition, Gucci's success has historically depended on the brand's creative director. The first collection in a more restrained style from the new head of the brand, Sabato de Sarno (Prada, D&G), was presented only in September and was launched in stores a month ago.
The company's future success will depend on whether the concept of "restrained luxury" is accepted by wealthy Chinese, market analysts say.
At the same time, they have no doubt about Kering's long-term prospects, although they point out the danger of concentrating on one brand. The group is doing something in this area (buying the Creed perfume brand and 30% of Valentino), but it is not enough.
Background. As reported, the Polish chain LPP, the owner of the Reserved, Cropp and Sinsay brands, has not actually left the Russian market – the company has forged documents on its withdrawal from Russia and continues to operate there.
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