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Kering’s Challenge with Gucci’s Revival Amidst Luxury Slowdown

Annelise Sylta



The luxury market is starting to slow down, and Gucci, a top brand of Kering SA, is experiencing a big drop. This downturn has made it clear that Gucci is struggling as it tries to find its new place in the market and adjust its strategies.

The Plight of Gucci

During a visit to a lowkey Gucci store in a Paris suburb, there were obvious signs of trouble. Items from previous seasons such as yellow pumps, furry slippers, and bold jackets were being sold at large discounts. This is not common for a highend brand like Gucci, which competes with Louis Vuitton, Chanel, and Hermès – brands that have kept their charm without cutting prices this way.

Once celebrated for leading fashion trends and innovations, Gucci’s strategy and leadership seem confused now.

Investors and market analysts doubt FrançoisHenri Pinault, Kering’s CEO, can restore Gucci to its previous success during this crucial period.

Comparative Market Performance

Other luxury brands within Kering and their competitors have managed better than Gucci. This year has been tough for Gucci, with a sharp fall in sales and several profit warnings that reduced Kering’s stock price significantly.

  • Kering’s stock dropped by as much as 8.9% in early trading sessions to its lowest point since 2018.
  • This year, Kering’s shares fell by 20%, whereas its competitors like LVMH and Hermès International saw their stock prices increase.

Gucci makes up more than twothirds of Kering’s operating profit. They recently hired Sabato De Sarno as a new creative director. His designs started appearing in stores recently.

Recently, the luxury group has warned that recovery will take time, given the slowdown in the luxury goods market.

Market Dynamics and Strategic Shifts

The decline in the luxury market is linked to economic downturns in crucial areas like China. Kering’s CFO, Armelle Poulou, pointed out that the Chinese market is sharply split. Customers are choosing either highpriced items or more budgetfriendly products. Gucci finds itself caught in the middle and hasn’t gained from this division.

In reaction to these challenges, Gucci is rethinking its product lines, especially its handbags. The brand plans to speed up new introductions hoping to attract customer interest.

Future Prospects and Industry Outlook

Gucci’s adjustment of its collections to meet market demands is essential for its upcoming performance. The reception of their new designs and their success will be key indicators moving forward.

Future product launches will play a key role in how quickly Gucci can recover, which also affects its parent company, Kering.

Experts like Luca Solca from Sanford C. Bernstein believe that during tough times in the market, brands trying to find their way often struggle more intensely. This issue seems especially significant for Gucci, causing investors to worry about shortterm profits for both Gucci and Kering.

Despite these difficulties, there are promising early reactions to Gucci’s new lines of clothing and shoes. These responses could signal a positive shift for the struggling brand.

As tastes and trends shift in the luxury market, it’s crucial for brands like Gucci to keep up with what consumers want. For Kering, improving Gucci’s performance is vital not just for the brand itself but also for maintaining a strong competitive stance in the broader luxury market.

Anne Lise is an MBA graduate with a passion for doing business research and fashion reviews. She has been with Busybodytribune for over 4 years now, and is the lead editor for the magazine.

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