French luxury goods company Kering is having difficulty with their 'main source of income'

Changes at Gucci include a new creative designer and less wholesale. The company is investing heavily in revamping Gucci through marketing, new designs, and store renovations. This is putting pressure on margins in the short term.

The weaker Chinese market is also affecting Gucci's sales. Asia continues to be its main market with 32% of sales. Gucci's new collections are expected to go on sale in the third quarter of 2024, but sales may not recover until 2025.

The success of Kering's restructuring strategy, especially for Gucci, will determine the company's future performance. Shares of the French company have opened with a drop of more than 7% and have accumulated a drop of 19% since the beginning of the year.

Luxury companies like Kering operate with higher profit margins than the sector average, enabling them to withstand periods of inflation. The exclusivity and high quality of their products allow them to raise prices without altering demand.

Read at London Business News | Londonlovesbusiness.com