Gucci slumps amid rise of ‘quiet luxury’

• Published date: 26 March 2024
• Publication title: Irish Times (Dublin, Ireland)

Last week, luxury giant Kering issued a profit warning, forecasting its first quarter sales to fall by 10 per cent year on year. Particularly troubled is the stable’s Gucci – which accounted for two-thirds of group operating income last year – where sales are expected to fall nearly 20 per cent on lower volumes in Asia

Shares in the French-based conglomerate are down about a third over the past 12 months and last week’s warning prompted another sell-off, with its share price declining by more than 16 per cent over the past week alone. It also dragged other luxury names like Luis Vuitton owner LVMH and Cartier owner Richemont, albeit to a more modest extent.

Not so long ago, shares in luxury stables were considered a hedge against inflation. The logic was essentially that sales of high price-point items were less affected by the rising cost of living simply because, well, the cost of living isn’t such a big concern for the kind of people who buy Hermès bags or Balenciaga couture. This sales trend has reversed somewhat over recent quarters and, in some corners, China’s economic woes have been...