French luxury group Kering’s star fashion brand Gucci grew sales by just 3.8%. This happened just in the third quarter. The pace of recovery from the pandemic has slowed down sharply, particularly in Asia. Luxury goods groups have bounced back strongly from the fallout of this Covid. This is because people across the world are returning to socialising. Shopping is a key source of revenue for the sector and that is remaining well below pre-pandemic levels.
Overall sales at Kering rose by 12.2%. This strips out the effect of acquisitions and currency fluctuations. This group flagged a strong performance in the United States. In western Europe the sales have been improved but a resurgence of COVID cases in late July and August weighed on revenue in the key Asia-Pacific region. Here Gucci sales were down 3%. The label has been losing steam compared to some rivals after years of stellar growth.
Revenue at Gucci to rise by 9% is the expectation of the analysts. By comparison, LVMH’s fashion and leather goods division, home to Louis Vuitton and Dior, posted a 24% increase. Kering’s finance chief, Jean-Marc Duplaix, stated that the group expected Gucci’s growth to accelerate in the fourth quarter after its new Aria collection. This includes a broader array of products than previous collections. They are expecting a very intense end of the year by noting the collection had been well received in markets around the world. The group was looking to support the brand with investments in events, communication, stores and recruitment. This is an effort that would hit the brand’s margin growth. Sales of smaller fashion labels Yves Saint Laurent and Bottega Veneta grew briskly. This is led by double-digit growth in North America and Europe. Asia has been a key growth driver for the luxury sector, mainly China. Because it is being closely watched by luxury investors, who are concerned that government measures aimed at reducing the wealth gap.
