Gucci China blamed for Kering slowdown
Falling sales by Gucci China have been blamed for a higher than expected drop in Gucci parent Kering’s first quarter global sales.
Sales at Gucci’s own 502 retail stores fell four per cent in the quarter and overall sales, on alike-for-like basis, fell eight per cent.
The worst performing region was Asia-Pacific, where sales slumped a full 10 per cent. Sales in Greater China “deteriorated compared to earlier in the year”, France-based Kering said in an earnings statement.
Sales rose six per cent in Western Europe and remained stable in North America.
Kering has responded with a promise to give its flagship Gucci brand, which accounts for 60 per cent of its sales, a revamp.
“Our priority is to give Gucci new impetus,” Kering finance director Jean-Marc Duplaix said.
The company blamed the sales drop off as part of a transition period, following its sacking of the brand’s CEO and design director last December. It has since split the roles, naming Marco Bizzarri as CEO and in-house designer Alessandro Michele as creative head. Bizzarri is credited for having turned around Bottega Veneta.
Michele’s strategy is to improve its entry-level offer, including small leathergoods and handbags.
Gucci will also continue to invest in building its online business.
Bottega Veneta, Kering’s second brand, also experienced slowing sales in the first quarter, but maintained growth at 3.1 per cent on a same store basis.
The company cited poor trading in Hong Kong and Macao for the drop, specifically a change in the demographic of mainland Chinese tourists. Hong Kong achieved 19 per cent of its sales in Hong Kong and Macau.