Recently, Kering released its results for the first quarter of 2024, and the sales of its luxury brand Gucci fell by 18%.
Gucci a bag has increased by 2,700 yuan in half a year
At the same time, the reporter learned that since the beginning of this year, a number of luxury brands, including Gucci, have set off a wave of price increases, and some popular products have risen by 1,000 yuan. But on the other hand, some of Gucci's styles are quietly entering the outlet and starting to discount, which seems to be gradually opening up the gap with other luxury brands.
Gucci's performance declined
The Asia-Pacific region, including China, remains the largest market
On April 23, local time, the French luxury group Kering announced its financial report for the first quarter of 2024. According to media reports, Kering's sales in the first quarter were 4.5 billion euros (about 34.9 billion yuan), a year-on-year decrease of 10%. The revenue of Gucci, the group's core brand, was 2.1 billion euros (about 16.3 billion yuan), down 18%, compared with a decrease of 4% in the previous quarter.
Kering reports financial results for the first quarter of 2024
According to the financial report, due to the sluggish market environment and the impact of the brand's strategic positioning, the decline in sales in the Asia-Pacific market, including China, was the reason for the decline in Gucci's performance in the first quarter. The company also expects recurring operating income to fall by 40% to 45% in the first half of 2024.
Kering's chief financial officer, Armelle Poulou, said in the earnings conference that Gucci's sales performance in the Chinese market is worrying. However, the increase in sales in the Japanese market and the advantage of the price difference due to the fluctuation of the yen exchange rate attracted a large number of tourists to buy luxury goods.
There are also many people who believe that the change in Gucci's performance is related to the change of designers. After the departure of creative director Alessandro Michele at the end of 2022, Gucci appointed Italian designer Sabato De Sarno as its new creative director at the beginning of last year, and his new collection began to enter stores in February this year. Luxury lovers say that compared to other luxury brands, Gucci's inability to produce good new models is also the reason why it has fallen behind.
Gucci changes creative director
"In recent years, Gucci has expanded its products and channels in a significant way to gain market share, ignoring the changing consumer base and the fact that the pace of product line expansion cannot keep up with the changing demand. Pan Jun, a visiting professor at Donghua University and a senior consulting director of commodity strategy of a company, believes that this has affected the continuity and stability of the company's business, and revenue has declined. External factors may include an unstable global economic environment and increased competitive pressures, all of which may affect sales in the luxury market.
This year, there have been 2 rounds of price increases
Gucci plans to reduce its outlets
While Gucci's sales have fallen, the price of its products has never stopped. "I bought a Gucci tote bag in November last year, with a price tag of 10,000 yuan, and I just happened to encounter a store discount, and finally spent 8,500 yuan to buy it," a consumer told reporters, when she recently checked again, she found that the price was 12,700 yuan, and it rose by 2,700 yuan in less than four months. A Gucci salesperson at the SKP mall in Chengdu said that some popular models have increased in price twice this year, and only once on March 1.
On January 1, Hermes completed the increase in the price line of all products, and brands such as Chanel and Prada also adjusted their prices. According to the VIP Research Institute, the average price of top brand bags has increased by more than 32% in the past three years. However, consumers love to buy LV and Chanel more and more.
"The new consumer group is generally relatively young and more inclined to own a first entry-level product of luxury goods, which has also led to the continuous increase in the price of basic and entry-level products of luxury brands and the large increase in sales." Yang Fan, an expert on luxury brands and vice president of Difan Diamond Company, said that these consumers are the focus of brands to cultivate and compete for, while real ultra-high-end customers are not sensitive to the rise in luxury prices.
While consumers are glad that the price of Gucci products has increased and become "wealth management products", another part of the "obsolete products" is reducing their prices. The reporter saw that some consumers "complained" on social platforms, and the newly bought Gucci bags at the counter entered the outlets in less than a few months and began to be sold at a discount, and even the popular Marmon also entered the outlets, but top luxury brands such as Hermes, LV, and Chanel never opened outlets, so the saying that Gucci's second luxury products do not maintain their value has also been circulated.
In fact, Gucci has realized the problem, according to media reports, Kering said in a previous earnings call that in order to maintain the value of the brand, the group is considering reducing the discount of its products, and plans to reduce the number of Gucci outlet stores as soon as this year.
(Source: Cover News)