Dry, the French luxury goods firm reported a bigger-than-expected drop in second-quarter sales as it struggled to revive its flagship Gucci label and faced weak demand from Chinese shoppers.
Sales under Kering also own labels Boucheron and Balenciaga which fell 11% to 4.5 billion euros ($4.9 billion) and this means second half operating income could fall by about 30%.
According to Jean-Marc Duplaix, Kering's deputy Chief Executive Officer (CEO) said there was a downward trend in June 2024 which continued until July while Kering's American Depository Receipts (ADRs) slipped 8% in New York.
Not only that, Paris-listed Kering shares were trading at their lowest level since 2017 ahead of its results which came after European trading even as sales at Gucci fell 19% in the quarter.
The minimalist designs from new creative director Sabato de Sarno that hit stores earlier this year are key to a reset that is pushing the upmarket to meet the needs of wealthier customers more immune to economic stress.
However, that effort has been complicated by a downturn in global luxury markets including China, which is experiencing a real estate crisis and high youth unemployment as Western markets recover from the post-pandemic meltdown.
Kering revealed that Gucci experienced a significant decline in Asia-Pacific and even the group's income from Chinese consumers at home and abroad saw a drop of 25% in the second quarter.
There's no denying that revenue was higher in Japan, but Dry sales in Asia fell 25% in the second quarter with Poulou pointing out that the biggest declines were in Hong Kong and Macau.
