Kering Group's financial results for the fourth quarter of 2023 showed a slight fall - six percent - across the board, not just at Gucci. At Gucci, the conglomerate's top-performing brand, sales were down 4%. Kering also said in a statement that it expected the first half of 2024 to be "challenging", with its Q1 2024 revenue expected to be down by nearly 20%. The slowdown in sales is expected to derive primarily from Asia. *Kering has a Gucci problem, but that certainly **_cannot_** be blamed on Xiao Zhan or any other brand ambassador. Kering's Gucci problem and its revenue decline across the board is the result of a complex economic situation.* 1. Quiet luxury brands like Tod's - another luxury brand for which Xiao Zhan is an ambassador have been subtly taking over. Overall, quiet luxury brands have been able to outperform their "loud" counterparts in 2024 by about 23%. It is an industry-wide trend that affected not just Kering. Another "loud" luxury brand Burberry was impacted as well. Burberry's revenue for the 13 weeks ending on 12/30/2023 declined by 7%, compared to the same time period in 2022. 2. With China's economy continues to be sluggish amid persistent deflation, an ongoing crisis in its real estate market, high-youth unemployment and long-term population decline, Kering's performance in China will inevitably be affected. In a tight economy, even affluent consumers will pull back on their spending. How China's economy will perform in 2024 will have a significant impact on Kering's bottom line.
