French luxury conglomerate Kering shocked investors with a 14% plunge in shares after issuing a rare profit warning. The company, which owns Gucci among other high-end brands, warned of a significant 20% drop in sales for the iconic fashion house in the first quarter of 2024.
The main reason cited for the decline in Gucci sales was a drop in transactions in Asia, particularly in China. This news comes in stark contrast to competitors LVMH and Hermes, which have remained resilient despite economic headwinds.
Kering’s announcement has set it apart from its competitors, leading to a drop in shares for other European luxury brands as well. The luxury sector as a whole has been facing challenges due to the ongoing pandemic and slowing global economy, but Kering’s warning has caused particular concern among industry insiders.
Looking ahead, it is expected that Asian markets, especially China, will continue to be a source of slowdown in sales for Kering and Gucci in the near future. Investors will be watching closely to see how the company navigates these challenges and if they can turn things around in the coming quarters.
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