Luxury Stocks Slump As Gucci Sales Dive

Luxury stocks took a hit in Europe following a profit warning from the owner of Gucci, which revealed a significant slowdown in demand for high-end goods, particularly in China, as reported by Hanna Ziady for CNN.

Kering disclosed that sales at its flagship brand Gucci were anticipated to drop nearly 20% year-on-year in the first quarter, primarily due to a sharp decline in the Asia-Pacific region.

Shares of Kering plummeted by as much as 15% in Paris, while LVMH, Europe’s second-most valuable company and owner of brands such as Louis Vuitton and Tiffany & Co., saw a decline of over 3% at one point.

Switzerland’s Richemont, renowned for Piaget watches, Montblanc pens, and Van Cleef & Arpels jewelry, experienced a 3% slip.

In London, the British luxury brand Burberry, which had previously warned of lower profits in January, fell by as much as 6%. After enjoying a prosperous period in the aftermath of the pandemic, luxury goods companies are now grappling with reduced demand in one of their key markets: China.

Consumer sentiment in the world’s second-largest economy has dampened due to an extended slump in the property market and associated economic slowdown.

In an unscheduled trading update released late Tuesday, Kering disclosed that sales at its flagship brand Gucci were anticipated to drop nearly 20% year-on-year in the first quarter, primarily due to a sharp decline in the Asia-Pacific region.

Overall, comparable sales at Kering are expected to decline by 10% for the period.

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