Kering’s Gucci Warning Wipes $6.8 Billion Off Market Value

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HONG KONG, CHINA - 2022/06/29: Shoppers walk past the Italian luxury fashion brand Gucci logo and store in Hong Kong. (Photo by Budrul Chukrut/SOPA Images/LightRocket via Getty Images)

Kering SA shares plunged after the French luxury group warned that sales at its Gucci brand have fallen about 20% in the first quarter as its brash look loses favor with Chinese shoppers.

The stock dropped 12% in Paris trading, its steepest decline since March 2020, wiping about €6.3 billion euros ($6.8 billion) from Kering’s market value.

Kering blamed a steeper-than-expected sales drop at Gucci in the Asia-Pacific region. The fashion group has been trying to revitalize the Italian label that accounts for about two-thirds of its profit, so far without success. The warning will likely prompt renewed speculation over how Kering might lessen its reliance on a brand known for flamboyant designs that are out of step with the current trend toward understatement.

Kering’s pain comes amid a cooling market for high-end goods and in particular weak demand in China. The Asia-Pacific region, excluding Japan, made up 35% of group revenue last year, more than Western Europe and North America. That’s slightly more than the 31% at LVMH.

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