Retail News CRM

Tag: Gucci

  • European Luxury Groups Shed €250 Billion as China Demand Slumps

    European Luxury Groups Shed €250 Billion as China Demand Slumps

    European luxury groups shed approximately €250 billion in market value this year as spending across mainland China slowed sharply. The decline forced earnings misses at LVMH, Kering and Hermes after a prolonged property downturn and financial market weakness eroded high-end consumption.

    Europe’s six largest listed luxury houses, including Richemont, Prada and Moncler, absorbed combined market capitalisation losses of €251 billion. LVMH lost €131.6 billion in value, while Hermes surrendered €93.3 billion as Chinese retail sales growth averaged under 0.5 per cent monthly over the past six months.

    Contracting Sales Across Major Houses

    Third-quarter disclosures pointed to widespread deterioration in client demand. Sales at LVMH’s fashion and leather goods division dropped by a mid-teens percentage among Chinese shoppers worldwide.

    Kering experienced an even sharper contraction. Group revenue from Chinese consumers fell between 15 and 20 per cent during the third quarter, worsening from the mid-teens decline recorded in the previous three months.

    Hermes recorded a 2 per cent decline in global ready-to-wear and accessories revenue. The house faced headwinds from falling equity prices in China alongside tighter regulatory scrutiny on overseas capital.

    Tax Pressures and Market Contraction

    Chinese authorities enacted a 20 per cent tax targeting dividends and interest income generated from offshore trusts. The policy took effect this week, adding fiscal pressure on affluent domestic shoppers who drive personal luxury sales.

    Financial markets offered no buffer. The CSI 300 index dropped 19 per cent over four months, erasing more than US$2 trillion in value as investors pulled back over domestic consumption trends and technology equity volatility.

    Broader consumer sentiment weakened alongside personal balance sheets, as the property slump and falling stock markets undermined domestic demand.

    Divergence in Luxury Resilience

    The downturn did not cut evenly across every luxury brand. Hermes expanded sales of Birkin bags and top-tier leather goods by 10.8 per cent globally, sustained by ultra-wealthy buyers.

    Fine jewellery also held up. LVMH’s Tiffany and Kering’s Boucheron produced double-digit percentage revenue increases during the quarter, outperforming ready-to-wear lines and standard footwear.

    Labels reliant on aspirational middle-class shoppers absorbed the heaviest hits. Kering struggled directly as shoppers postponed entry-level purchases, whereas houses anchored strictly to ultra-high-net-worth allocations preserved margin stability.

    Pressures Spread Beyond Asian Borders

    American spending failed to offset the drag from mainland China. Citi credit card transaction figures showed luxury purchasing falls of at least 4 per cent across July, August and September.

    Rising fuel costs and cooling stock performance curtailed discretionary outlays in the United States. Kering confirmed mounting strain on American household expenditure heading into the November elections.

    For luxury operators in Asia, capital allocations will shift from aggressive footprint expansion toward cost controls and productivity gains per square metre.

  • Hermes and Cartier Suffer Double-Digit Sales Slump in Mainland China

    Hermes and Cartier Suffer Double-Digit Sales Slump in Mainland China

    Hermes and Cartier recorded double-digit sales drops in mainland China across August and September, as high-net-worth shoppers joined the broader retreat from luxury spending.

    The contraction also hit the mainland’s top 25 luxury houses, pulling revenue down by double digits for labels such as Louis Vuitton and Gucci over the same two months.

    Foot traffic and store receipts failed to rebound during the seven-day National Day Golden Week in early October, despite an uptick in domestic travel expenditure. That persistent weakness has prompted luxury executives across the sector to brace for a protracted downturn stretching into 2027.

    Top Spenders Join Middle-Class Pullback

    Luxury groups long banked on their wealthiest VIP clients to absorb the blow of an exiting middle class, whose spending power evaporated in a prolonged residential property slump. That insulation has now cracked under the weight of softer equity markets and stricter scrutiny of offshore assets by authorities in Beijing.

    The simultaneous loss of entry-level aspirational buyers and very high-net-worth patrons removes the core financial buffer that protected top-tier European houses. With high-ticket categories bearing the brunt of consumer restraint, retail receipts for jewellery and automobiles dropped as much as 21 per cent in the August-September stretch, even while overall retail sales growth crawled from 0.4 per cent in August to modest gains in September.

    Earnings Divergence Across Greater China

    Hermes reported flat Asia-Pacific revenue for the third quarter on October 22, falling short of the 1.55 per cent growth projected by market consensus. The Asia-Pacific zone, excluding Japan, accounts for roughly 42 per cent of total group turnover for the French saddler, exposing its balance sheet directly to Chinese market softness.

    For Richemont, sustained demand in regional travel hubs like Hong Kong and Macau softened some of the revenue bleed suffered by Cartier boutiques inside the mainland. Yet off-island spending remains insufficient to balance domestic showroom declines, especially as Chinese shoppers reduced their overseas spending by mid-single-digit rates over the quarter.

    LVMH Moet Hennessy Louis Vuitton mirrored the downtrend with a double-digit slide in domestic China sales, dragging its broader Asia region outside Japan down 5 per cent. Kering suffered a 6 per cent drop at flagship label Gucci over the same third-quarter window, missing consensus estimates as Chinese transactions deteriorated.

    The Pivot Away From Conspicuous Labels

    Chinese consumers are actively reallocating personal budgets away from visible status symbols toward hospitality, experiential dining, and domestic travel. Younger demographics in tier-one cities increasingly favour understated craft over prominent monograms, accelerating the shift toward unbranded apparel and pre-owned luxury consignments.

    For landlords holding high-end floor space in prime developments across Shanghai and Beijing, the downturn threatens luxury turnover rent models that depend on relentless retail volume. Department store operators face mounting inventory overhangs and may be forced to negotiate revised concession terms if mainland volumes continue falling.

    The downturn gained momentum after June, when a broader consumer slowdown spread into previously resilient categories. The trend worsened through late summer, confirming that the defensive moats built around heritage brands like the Birkin maker could not deflect local macroeconomic strain.

    Challenging Comparisons Extend Toward 2027

    Eric Du Halgouet, chief financial officer at Hermes, confirmed during an earnings briefing that China’s operating landscape faces head-to-head pressure from sluggish financial markets and ongoing tax-related scrutiny. Rather than an immediate rebound, analysts expect lower baseline figures in 2026 to produce statistical improvements in reported growth by 2027 without resolving structural shifts in domestic consumer confidence.

    Brand heads are now recalibrating store expansion budgets across mainland tier-two cities, while waiting to decide whether to reallocate marketing capital.

  • China’s 20% Tax Crackdown Piles Pressure on Luxury Brands

    China’s 20% Tax Crackdown Piles Pressure on Luxury Brands

    China’s 20 per cent tax crackdown on wealthy individuals has become the latest headache for luxury brands ahead of third-quarter financial results. Under Beijing’s new rules, affluent citizens who used offshore trusts to shelter assets have until October 22 to declare and pay years of back taxes, threatening spending in a market that generates roughly a fifth of global luxury purchases.

    Shares in LVMH and Birkin bag maker Hermes are both down about 40 per cent this year near multi-year lows, while Gucci owner Kering has fallen 29 per cent. Summer shopping mall data in mainland China pointed to a sharp deceleration in growth, according to Bernstein analysts.

    Tax Deadlines and Retail Liquidity

    The 20 per cent levy is hitting spending by ultra-high-net-worth individuals, a tier that had previously proved more resilient than middle-class consumers affected by China’s prolonged property downturn. Alexis Bonhomme, head of Shanghai-based luxury consultancy Trinity Asia, noted that some shoppers face short-term liquidity constraints before the compliance window closes.

    “Until the deadline to pay the tax, some people may face liquidity issues”, Bonhomme said. “This doesn’t mean they won’t start buying again, but right now, the mood just isn’t there,” he added.

    Quiet Luxury Pulls Ahead in Mall Aisles

    Two industry sources familiar with third-quarter mall trading in mainland China said overall conditions remained weak, although performance varied widely between brands. Smaller “quiet luxury” labels such as cashmere specialist Brunello Cucinelli and LVMH’s Loro Piana are outperforming more conspicuous brands such as Louis Vuitton and Gucci.

    High-end jewellery remains a bright spot. Brands such as Richemont’s Cartier have benefited as wealthy consumers increasingly favour gold and precious materials, which are viewed as offering more enduring value.

    Global Headwinds Compound Asia Weakness

    The slowdown in China comes as luxury demand softens in the United States, the industry’s largest market. US credit card spending on luxury goods tracked by Citi fell for a third consecutive month in September as consumer confidence weakened ahead of midterm elections.

    Luxury houses are also grappling with fallout from the Iran war. Kering has already warned analysts to expect a further contraction at Gucci, prompting brokerages to cut their stock price targets.

    Earlier Strains and Upcoming Earnings

    The $350 billion luxury sector remains mired in a three-year slowdown after pandemic-era demand weakened. In downtown Beijing, Deng Qi, an exporter of ceramic building components, forecast 20 per cent less luxury spending than in previous years, warning that the offshore tax measures undermine confidence across the broader wealthy demographic.

    Investors will receive their first read on the sector when LVMH reports results on Monday, with analysts forecasting quarterly sales of €18.5 billion ($20.7 billion), up 1 per cent from a year earlier. Kering and Hermes report their quarterly performance on October 22.

  • LVMH Loses $167 Billion in Value as Chinese Shoppers Cut Handbag Spending

    LVMH Loses $167 Billion in Value as Chinese Shoppers Cut Handbag Spending

    LVMH has lost more than $167 billion in market value this year as Chinese consumers pull back from expensive handbags, cutting group valuation by more than half from its peak above $500 billion.

    The selloff exposes the conglomerate’s heavy concentration in a single division and a single region, with Asia excluding Japan generating 35 percent of Fashion and Leather Goods revenue in 2025.

    Fashion and Leather Goods accounts for roughly three-quarters of recurring operating profit across LVMH’s 75 brands. UBS estimates the flagship Louis Vuitton label alone generates more than half of divisional earnings. Chinese shoppers account for nearly a third of all fashion and leather sales, leaving group performance tightly bound to domestic sentiment in mainland China.

    Bernard Arnault, the 77-year-old chairman and chief executive whose family controls 65 percent of voting rights through Agache, faces a market where the pricing power of the past five years has stalled. Average luxury prices rose 54 percent between late 2019 and September 2024, according to HSBC estimates. While that strategy lifted group revenue from €54 billion in 2019 to €86 billion in 2023, shoppers in Asia are no longer absorbing further price increases for coated canvas and leather.

    Mainland luxury market contracts for two straight years

    China’s personal luxury goods market shrank between 18 percent and 20 percent in 2024, followed by an additional decline of 3 percent to 5 percent in 2025, according to Bain estimates. Leather goods suffered the steepest drops, falling between 8 percent and 11 percent last year. Real estate weakness and employment concerns have eroded consumer confidence, while local fashion labels have gained market share by emphasizing cultural relevance.

    Consumer budgets are shifting rather than disappearing entirely. A 2026 survey by Oliver Wyman found 37 percent of affluent Chinese consumers plan to increase spending on prestige beauty, compared with just 4 percent planning higher spending on leather goods. L’Oréal recorded 10 percent revenue growth for its Luxe division in China during its latest reported quarter, while Compagnie Financière Richemont reported a 14 percent sales rise at constant currency for jewellery brands Cartier and Van Cleef & Arpels in the year to March.

    Rivals test price cuts while Vuitton protects margins

    Rival luxury groups are responding with aggressive regional pricing adjustments. Gucci reduced prices by 20 percent to 30 percent across several handbag collections to recruit entry-level customers, while Chanel rolled out smooth-leather accessories positioned below its signature quilted lines. Chanel lifted first-half comparable sales by about 16 percent following the adjustments.

    LVMH has resisted broad price reductions, choosing instead to invest in store upgrades and creative turnover at Dior and Loro Piana. Bernstein calculations indicate a hypothetical €1,350 entry-level Vuitton bag could generate €440 million in incremental revenue and boost divisional unit volume by 5 percent, even if average selling prices drop 1.8 percent. For now, the group relies on North America to offset Asian weakness, with Jefferies forecasting 5 percent growth in US fashion sales against a 10 percent contraction across its Chinese customer base in the third quarter.

    Local missteps add friction in mainland malls

    Brand perception in China has faced additional scrutiny. A trademark dispute in which Louis Vuitton successfully sued Shenzhen-based drinks chain Molly Tea over a floral pattern triggered public backlash from state media and social network users, who argued the design stemmed from traditional Chinese heritage. Jefferies reported the controversy caused a measurable drag on Vuitton’s mainland store sales.

    Direct acquisitions of Western luxury houses offer little help because LVMH’s current revenue base is too large for mid-sized European brands to move group earnings. Competitors have turned to minority equity investments in local players: Kering took a minority holding in Shanghai-based ICICLE parent ICCF, while L’Oréal backed domestic Chinese fragrance companies To Summer and Documents to tap shifting consumer taste.

    Earnings multiple resets to five-year lows

    The structural shift follows five years of rapid expansion that ended late in 2024, when LVMH posted its first quarterly revenue contraction since 2020. Divisional sales in Fashion and Leather Goods dropped 1 percent in 2024 and slipped another 5 percent in 2025, breaking an operating margin run that had peaked at 26.5 percent.

    Equity markets have adjusted valuations accordingly. LVMH trades at roughly 16 times forward earnings, down from 24 times at the start of the year, as institutional investors wait for third-quarter earnings figures to determine whether Chinese cluster sales can stabilize before year-end.

  • Global Luxury Set to Grow 2 to 5 Percent as Burberry and Kering Reset

    Global Luxury Set to Grow 2 to 5 Percent as Burberry and Kering Reset

    Global luxury spending is set to grow between 2 percent and 5 percent this year following a three-year malaise, according to Boston Consulting Group data presented at an executive roundtable last Thursday.

    The projected rebound is driven by an 8 percent increase in North America and a 2 percent to 3 percent recovery in China, while Middle East sales are expected to drop by double digits.

    Executives from Burberry and Kering told the gathering that brands are overhauling strategies and price points, as a BCG survey of 12,000 luxury shoppers revealed that 70 percent have avoided purchases due to price increases.

    Shifting Price Points and Product Lines

    Burberry is running a turnaround plan called Burberry Forward, focused on brand identity, client engagement, core merchandise, and store distribution. Laura Dubin-Wander, Americas president for the brand, said it is refocusing on heritage outerwear and accessible entry products. To draw new shoppers, the house set up dedicated trench coat areas, scarf bars, and displays for $400 polo shirts.

    Its store network is also under review. The company plans to downsize or exit unproductive sites while adding pop-ups in affluent resort towns and growing its womenswear athleisure range. On the marketing side, it added American athletes like Carmelo Anthony to build wider recognition.

    Across Asia-Pacific, landlords and department stores must rebalance their floor space. Retailers that gave prime ground-floor square footage to high-priced ready-to-wear collections now see lower sales densities. Operators in hubs like Shanghai, Tokyo, and Singapore are shifting space toward beauty counters, eyewear concessions, and fragrance boutiques where sales volumes hold up.

    Brand margins are shifting as sales move from runway lines to entry-level accessories. Labels must sell far more low-ticket units to offset slowing ready-to-wear purchases. That puts direct pressure on boutique staffing and stock management.

    Price Sensitivity Bites Top Spenders

    Affordability concerns now reach well beyond entry-level shoppers, according to an annual survey of 12,000 luxury consumers by BCG and Altagamma. Roughly 70 percent of respondents walked away from a planned purchase at least once due to a price increase. Most redirected that money into luxury cosmetics and skincare.

    Kering is splitting its commercial strategy to handle this divide between wealthy clients and aspirational buyers. Ewa Abrams, Americas president at Kering, said top-tier clients expect private, personalized service. Aspirational shoppers, by contrast, respond to cultural partnerships in entry categories such as eyewear and fragrances.

    It’s important to stimulate them with the right product categories such as eyewear or fragrance.

    Channel Synergies and Technology Steps

    A shared operational platform now runs across the French group’s houses, including Gucci, Saint Laurent, Balenciaga, and Bottega Veneta. The setup streamlines administration. It also uses artificial intelligence to accelerate commercial decisions.

    Social commerce is another testing ground. Tim Chai, head of product strategy at TikTok Shop, said digital luxury consumers favor unpolished, direct brand communication over rigid corporate campaigns. Burberry adopted fast-paced video clips to show British heritage to younger online shoppers.

    Customer discovery is increasingly driven by artificial intelligence. The BCG survey found 90 percent of luxury shoppers use AI tools daily or weekly to find products, compare prices, and get recommendations. Those shoppers also trust AI comparison tools more than traditional social media influencers.

    Regional Exposure and China Trajectory

    Recent restructuring follows a painful financial stretch across the European luxury sector. London-listed Burberry posted full-year revenue of $2.42 billion and net income of $21 million, leaving an operating margin of 0.87 percent. Paris-based Kering generated trailing twelve-month revenue of 14.46 billion euros and recorded a net loss of 322 million euros as demand slowed in key Asian shopping cities.

    Investors will get their next check on November 12, 2026, when Burberry reports interim results. Those numbers will show whether lower price points and store cuts can stop margin erosion.

  • Gucci Shifts Sneaker Manufacturing to China in Break with Tradition

    Gucci Shifts Sneaker Manufacturing to China in Break with Tradition

    Gucci has begun manufacturing new sneaker models in China this season, departing from its longstanding practice of producing all footwear within Italy.

    The move by parent group Kering marks the first time the luxury house has placed assembly of select athletic footwear lines directly into Chinese manufacturing hubs, targeting supply chain efficiency and regional technical capabilities.

    Shifting the European Production Model

    European luxury houses have historically defended the ‘Made in Italy’ label as a core pricing pillar. Gucci’s pivot to Chinese production lines reflects the technical dominance Asian facilities hold over complex athletic shoe construction. Technical footwear demands specialised tooling, bonding agents, and synthetic mesh engineering that Italian artisan workshops rarely handle at volume.

    Kering, Gucci’s parent group, faces pressure to improve margins while defending market share in mainland China. Producing sneakers closer to Asian supply networks cuts shipping times and lowers unit assembly costs on high-turnover casual lines.

    Brand Equity and Consumer Perception

    Consumer reaction across Asia will test how rigid luxury buyers remain regarding country-of-origin labels. Chinese luxury consumers increasingly prioritise product quality, technical execution, and brand relevance over traditional European manufacturing stamps. Younger buyers who purchase luxury streetwear sneakers evaluate comfort and silhouette ahead of heritage claims.

    Other luxury competitors will watch the rollout closely. If Gucci maintains its retail price points without consumer backlash, rival houses will accelerate their own offshore manufacturing plans for technical categories. If shoppers resist, Gucci risks diluting the prestige that supports its footwear margins.

    Supply Chain Realignment

    Sourcing sneaker production in China shortens logistics cycles between Asian factories and regional flagship stores. Direct domestic distribution lowers tariffs and inventory lead times across key East Asian markets.

    Italy will retain production for Gucci’s formal leather shoes, handbags, and core ready-to-wear collections. Segmenting technical streetwear from traditional leather goods allows the brand to split its manufacturing strategy without abandoning its Tuscan heritage entirely.

    The Road Ahead for Footwear Lines

    Gucci plans to distribute the first Chinese-assembled sneaker models across global wholesale and retail channels over the coming season. Sell-through rates across department stores and flagship boutiques will dictate whether Kering expands Asian production into additional accessory categories.

  • Over 90 per Cent of Luxury Consumers Seek Experiences Beyond Products

    Over 90 per Cent of Luxury Consumers Seek Experiences Beyond Products

    More than 90 per cent of luxury consumers now seek brand experiences outside the product itself, including hospitality, travel, dining, and wellness, according to a 2026 report by MG2 Advisory.

    Craftsmanship remains the primary purchasing driver for 62 per cent of buyers, yet luxury houses such as Hermès, Gucci, and Kith are increasingly evaluated on the ongoing relationships and environments they build around their goods.

    More than three-fourths of respondents associate luxury with rarity and exclusivity, while nearly half expressed interest in private, members-only spaces and repair services that preserve product value.

    Hospitality reshapes flagship formats

    Houses are reacting by building operational ecosystems that extend past apparel and leather goods. Kith opened its members-only Ivy concept to integrate sport, dining, and retail, while Gucci expanded its culinary presence through Gucci Osteria da Massimo Bottura. In London, Hermès opened its sixth Hermès Maison concept store, replicating mixed hospitality and retail formats already operating in Tokyo, Seoul, Shanghai, Paris, and New York.

    For prime landlords across Asia-Pacific, this shift changes leasing economics entirely. Retailers no longer evaluate store footprints solely on sales density per square metre. Instead, top-tier brands require larger floorplates to accommodate private client salons, cafes, and preservation workshops, forcing mall operators in Hong Kong, Singapore, and Tokyo to reallocate prime ground-floor space from transactional sales to experiential services.

    The operational risk sits squarely in execution. Running fine dining, bespoke tailoring, and hospitality requires different supply chains and labour models than selling boxed leather goods. When service levels in brand-run restaurants or repair centres slip, the reputational damage flows directly back to the core fashion label.

    After-care moves to the balance sheet

    Post-purchase services have evolved from back-office cost centres into client retention mechanisms. Hermès and Louis Vuitton have reinforced dedicated repair units to extend product lifespans, while Coach runs its circular (Re)Loved restoration and resale division across major retail markets.

    Physical flagships in major regional capitals will increasingly reflect this split between exhibition and maintenance. The next metric to watch is whether luxury groups maintain capital expenditure for multi-floor experiential maisons as store construction costs and prime commercial rents across Asia climb through late 2026.

  • China Luxury Label Icicle Hires Former Gucci Head Sabato De Sarno

    China Luxury Label Icicle Hires Former Gucci Head Sabato De Sarno

    China’s Icicle hired former Gucci creative director Sabato De Sarno on Monday to lead its design operations across ready-to-wear, accessories and eyewear.

    His debut collection for the Shanghai-based fashion house will arrive for the autumn/winter 2027-2028 season.

    The Kering connection and design scope

    De Sarno takes direct control of creative direction for both women’s and men’s lines. The Italian designer previously ran design at Gucci, the flagship label of French luxury group Kering.

    The appointment deepens ties between the two businesses. Kering took a minority stake in Icicle in April 2026, giving the Chinese brand financial backing and direct access to European luxury executive networks.

    Chinese brands buying European prestige

    Chinese fashion groups are increasingly hiring established European designers to push their brands upmarket and expand outside mainland China. Icicle built its domestic business on high-end natural fabrics and understated cuts, but matching European heritage houses requires international design pedigree.

    The approach carries clear execution risks. Integrating European creative directors into Chinese corporate structures has produced mixed commercial returns, requiring labels to balance Western aesthetic direction with a core domestic customer base that values different proportions and styling.

    Precedents across the domestic sector

    Down-jacket specialist Bosideng followed the same playbook in 2025 when it hired British designer Kim Jones to lead its luxury line, Areal. French luxury group Hermes took a similar path with Shang Xia, which hired London-based designer Yang Li in 2021.

    Icicle is now preparing its production pipeline and marketing rollout ahead of De Sarno’s first autumn/winter 2027-2028 show.

  • Kering Redirects up to €300 Million to Asia as Regional Sales Grow 12 per Cent

    Kering Redirects up to €300 Million to Asia as Regional Sales Grow 12 per Cent

    Kering has reallocated up to €300 million in capital toward Asia-Pacific markets as regional sales growth of 8 to 12 per cent outpaced softer Western demand across its fashion portfolio.

    Asian territories now generate nearly half of total group revenue, led by Greater China at 20 to 25 per cent, Japan at 8 to 10 per cent, and the rest of Asia-Pacific contributing 10 to 15 per cent.

    Where the Revenue Comes From

    Direct-to-consumer flagship boutiques in cities like Shanghai and Tokyo anchor the group’s regional retail network, capturing full-margin sales. Wholesale partnerships with upscale department stores account for 35 to 40 per cent of total volume, while digital commerce platforms generate 15 to 20 per cent. The standalone eyewear division adds between €1.5 billion and €2 billion annually across all licensed and owned lines.

    Yves Saint Laurent proved the strongest performer in the region. The label expanded at annual rates of 25 to 30 per cent in Asian markets between 2019 and 2023, lifting global house sales from €3.18 billion in 2022 to an estimated €3.7 billion by 2024.

    Brand Performance and Capital Shifts

    Gucci remains the conglomerate’s largest single cash generator, producing roughly €9.5 billion in 2024 revenue. Its share of group intake fell from 52 per cent in 2022 to 48 per cent, prompting management to divert capital toward faster-growing labels and regional retail upgrades.

    Bottega Veneta generated between €1.8 billion and €1.95 billion with gross margins reaching 68 per cent, driven by leather goods demand. Balenciaga showed signs of recovery with projected growth of 5 to 8 per cent after revenues contracted 15 per cent during 2023.

    European luxury groups spent the past two years reassessing their heavy reliance on flagship labels in Asia. While rivals like LVMH diversified early across jewellery and hospitality, Kering’s concentrated bets on fashion houses make regional retail productivity critical to its bottom line.

    Management continues to review smaller portfolio brands generating under €200 million annually, with further divestment decisions expected as capital shifts to primary retail hubs.

  • Coty Full-Year Revenue Drops Five per Cent to US$5.8 Billion Ahead of Gucci License Loss

    Coty Full-Year Revenue Drops Five per Cent to US$5.8 Billion Ahead of Gucci License Loss

    Coty posted a five per cent decline in full-year net revenue to US$5.8 billion as the beauty group prepares to surrender its lucrative Gucci license.

    Fourth-quarter adjusted EBITDA dropped 26 per cent to US$93.6 million, dragging operating margins down 270 basis points to 7.4 per cent. Like-for-like sales in the final quarter slipped one per cent to US$1.3 billion, prompting Coty shares to fall 7 per cent in after-hours trading after management withheld financial guidance for fiscal 2027.

    Markus Strobel, Coty executive chairman and interim chief executive, designated fiscal 2027 a transition year focused on lowering fixed overheads. The departure of Gucci Beauty will trigger an additional drop in revenue and profit in fiscal 2028.

    Fixed costs and new fragrance licenses

    Management plans to counter the Gucci exit by cutting fixed corporate costs and expanding newer licensing contracts. The pipeline relies on cosmetics under Marc Jacobs Beauty alongside fragrance agreements with Swarovski, Etro and Marni.

    GlobalData managing director Neil Saunders noted that replacing Gucci volume requires stronger performance from remaining prestige lines, especially across department stores and travel retail networks. Retail OCD chief executive Barney Stacher cautioned that cost reductions cannot compensate for weak brand heat across mass colour cosmetics lines such as CoverGirl, Rimmel and Max Factor.

    Mass beauty shelf pressure

    Fragrance sales continue to generate cash across Asian metropolitan markets, but Coty’s mass cosmetics portfolio faces intense shelf competition from nimble regional and domestic beauty labels. Rebuilding brand visibility in physical retail and digital storefronts requires targeted product development rather than broad promotional discounting, according to Pepperdine Graziadio Business School marketing professor Kimber Maderazzo.

    Coty will deliver the final decisions from its strategic review of the Consumer Beauty unit by the end of 2026 before the Gucci transition takes effect in fiscal 2028.

  • Vietnam Authorities Crackdown on Counterfeit Luxury Goods: Over 1,800 Fake Gucci, Hermes Items Seized

    Vietnam Authorities Crackdown on Counterfeit Luxury Goods: Over 1,800 Fake Gucci, Hermes Items Seized

    A significant crackdown operation in Vietnam resulted in the seizure of over 1,800 counterfeit luxury items, including fake Gucci glasses and Hermes watches. The operation targeted a store specializing in the sale of counterfeit branded merchandise.

    Vendor Fined for Counterfeit Goods

    The Market Surveillance Department in Quang Ngai Province revealed that a 35-year-old vendor in Tinh Khe Commune faced a hefty fine of VND102.5 million (US$4,200) for showcasing and selling 1,000 counterfeit Gucci glasses and 800 counterfeit Hermes watches. All seized items were confiscated and are slated for destruction.

    The authorities stated that the trademarks in question enjoy legal protection in Vietnam. The imposed penalties form part of a wider initiative to clamp down on the circulation of counterfeit, imitation, and substandard goods in local markets.

    Effects of Counterfeit Goods on the Market

    Market surveillance officials stressed that selling counterfeit branded items not only breaches intellectual property laws but also poses the risk of misguiding consumers and damaging the reputation and operations of genuine businesses.

    Additional Enforcement Operations

    In a separate enforcement initiative, a market surveillance team, in conjunction with the police, discovered a substantial amount of goods that lacked the necessary documentation. In one instance, a distributor was found in possession of 675 water filter cartridges branded as “A Qua” and “OCB” without any invoices or evidence of legal origin.

    Another business, engaged in the trading of electric bicycles and electric motorbikes, was flagged for violating labeling regulations, including the omission of compulsory details like manufacturing dates. The total value of the improperly labeled goods amounted to an estimated VND34.5 million.

    Strict Penalties for Commercial Fraud

    Market surveillance officers and local police appealed to businesses to sell only merchandise with verifiable origins and comprehensive documentation. They warned that commercial fraud for profit would be subjected to stringent penalties, and enforcement actions would only escalate.

    Questions & Answers

    What were the counterfeit items discovered in the operation?
    The operation uncovered over 1,800 counterfeit items, including 1,000 fake Gucci glasses and 800 counterfeit Hermes watches.

    What is the impact of selling counterfeit goods on the market?
    Selling counterfeit branded goods not only infringes on intellectual property laws but also risks misleading consumers and undermining the operations of legitimate businesses.

    What measures are being suggested to businesses to avoid legal issues?
    Market surveillance officers and local police encourage businesses to sell only goods with clear origins and complete documentation. Businesses are also urged to comply with labeling regulations.

  • Ho Chi Minh City Ceo Arrested: Accused Of $570,200 Counterfeit Perfume Operation

    Ho Chi Minh City Ceo Arrested: Accused Of $570,200 Counterfeit Perfume Operation

    In a recent turn of events, a CEO and his spouse based in Ho Chi Minh City (HCMC) have been apprehended by the police on the grounds of allegedly manufacturing and marketing tens of thousands of fraudulent perfume bottles. These counterfeit products bore the labels of well-known luxury brands such as Chanel, Gucci, and Dior, among others. The illicit profits gathered from this illegal enterprise are estimated to be around VND15 billion (US$570,200).

    The Masterminds and Their Accomplices

    The individuals caught in this scandal are Nguyen Ngoc Tho, the CEO of Nguyen Huong, and his wife, Truong Thi Mai Hien. Along with them, nine other people were also taken into custody by the HCMC police on charges related to the production and sale of fraudulent goods.

    The couple has been identified by the authorities as the key instigators behind this significant counterfeit perfume production ring.

    The Raid and Confiscation

    During a recent operation at the company’s production site within the city, the law enforcement officers seized 20,000 imitation perfume bottles carrying the tags of elite luxury brands. The authorities also confiscated various perfume-making equipment and tools used in the fraudulent operations.

    The Counterfeit Scheme

    The authorities have accused the couple of initiating this scheme since the beginning of last year. Apparently, Tho observed a surge in perfume demand and started researching and creating formulas for counterfeit perfumes online.

    Together with his wife, Tho procured machinery, raw materials, and perfume bottles. They rented a production facility and mainly hired family members to blend, fill, label, and package the fake perfumes.

    They promoted these spurious products on social media platforms and distributed them in vast quantities across numerous provinces.

    Questions & Answers

    What are the legal implications of the case?
    Given the scope of the fraudulent operation and the brand value of the companies affected, significant legal implications can be anticipated. This includes potential jail time, hefty fines, and possible lawsuits from the affected brands.

    What was the primary market for these counterfeit products?
    The couple leveraged the internet and social media platforms to market these counterfeit products, targeting customers in several provinces.

    Who were involved in the production process of these counterfeit perfumes?
    The CEO and his wife led the operation, hiring mainly family members in their production facility to create the counterfeit perfumes.

  • Fake Louis Vuitton, Gucci shoes seized in $1.3M Hong Kong counterfeit bust

    Fake Louis Vuitton, Gucci shoes seized in $1.3M Hong Kong counterfeit bust

    In a recent operation, Hong Kong officials intercepted an estimated HK$10 million worth of suspected counterfeit clothing and footwear, featuring labels from major brands such as Louis Vuitton, Gucci, and Nike. The operation, held between October 6 and 17, resulted in the confiscation of approximately 18,000 items and the arrest of two individuals, according to an announcement from the Hong Kong Customs and Excise Department.

    Details of the Seized Goods

    The confiscated merchandise included items bearing the branding of Nike, Adidas, Louis Vuitton, and Gucci. Officials believe these products were headed for foreign markets, specifically in Europe and America, to capitalize on the demand generated by large-scale global events.

    “Large events, such as sports shoe exhibitions, often see collectors and enthusiasts trading items on-site, which escalates the demand for high-quality counterfeit sports shoes,” explained Inspector Yeung Tit-fung from the department.

    Investigation and Legal Consequences

    The investigation into these cases is currently ongoing. The arrested individuals have been released on bail, pending further investigation. The Hong Kong legislation stipulates that importing or exporting products carrying a counterfeit trademark could lead to a maximum of five years imprisonment and fines reaching up to HK$500,000.

    The Customs Department revealed plans to intensify inspections and execute intelligence-driven operations to combat counterfeiting and trademark infringement activities.

    Previous Operations

    The department had previously conducted a week-long operation in late September, which focused on the city’s major shopping districts ahead of the Golden Week holiday. This operation resulted in the seizure of around 2,000 suspected counterfeit handbags, leather goods, and fashion accessories, with an estimated market value of HK$1.3 million.

    Questions & Answers

    What brands were predominantly featured among the seized goods?
    The seized items predominantly featured branding from major labels such as Louis Vuitton, Gucci, Nike, and Adidas.

    What are the legal consequences for importing or exporting counterfeit products in Hong Kong?
    In Hong Kong, the import or export of goods bearing a counterfeit trademark can result in up to five years of imprisonment and fines of up to HK$500,000.

    What measures are the Hong Kong Customs Department taking to combat counterfeiting?
    The Hong Kong Customs Department plans to enhance inspections and implement intelligence-led operations to prevent counterfeit and trademark infringement activities.

  • Francesca Bellettini confirmed to lead Gucci

    Francesca Bellettini confirmed to lead Gucci

    The esteemed luxury conglomerate Kering has announced the appointment of Francesca Bellettini as the new president and CEO of one of its prime brands, Gucci. She steps into the role, succeeding Stefano Cantino who served for a brief tenure of nine months.

    Bellettini will be reporting directly to Luca de Meo, the CEO of Kering. In addition, Jean-Marc Fuplaix, the Group’s COO, will continue his role, providing additional support to de Meo in the strategic development and management of the group.

    A New Direction

    At this critical juncture, de Meo has expressed his intent to create a more streamlined and transparent organization, enabling the industry’s top talent to propel Kering’s brands forward. He emphasized that Gucci, being the group’s flagship brand, warrants the keenest focus. He is confident that Bellettini, who is among the most seasoned and revered professionals in the luxury industry, will provide the effective leadership and impeccable execution required to reinstate the brand to its prestigious position.

    Bellettini has a long-standing association with Kering, having held various leadership positions since she joined the company in 2003. Her commendable career progression includes being named the president and CEO of Saint Laurent in 2013 and later earning the designation of deputy CEO in charge of brand development at Kering in 2023.

    A New Role, A New Vision

    Bellettini expressed her gratitude for the opportunity to directly oversee Gucci, one of the world’s most recognized luxury brands. She looks forward to working under the guidance of Luca de Meo, whose innovative and fresh approach motivates the team to transcend conventional boundaries.

    Questions & Answers

    Who is the new president and CEO of Gucci?
    Francesca Bellettini has been appointed as the new president and CEO of Gucci.

    Who will Francesca Bellettini report to in her new role?
    Francesca Bellettini will report to Luca de Meo, the CEO of the Kering group.

    What is Luca de Meo’s vision for Kering with this new appointment?
    Luca de Meo intends to streamline the organisation, ensuring the best talent drives the group’s brands forward. He believes Francesca Bellettini’s leadership will be instrumental in restoring Gucci to its rightful place in the luxury industry.

  • Client data exposed in Gucci, Balenciaga and McQueen cyberattack

    Client data exposed in Gucci, Balenciaga and McQueen cyberattack

    Luxury brands Gucci, Balenciaga, and Alexander McQueen have fallen victim to a cyber attack, leading to the potential theft of millions of customer’s private details. The assault targeted Kering, the French corporation that owns these prestigious labels.

    Kering recognized and confirmed the breach but did not publicly name the brands impacted. In a statement made in June, they reported that “an unauthorized third party momentarily gained access to our systems and accessed limited customer data from some of our Houses”.

    This incident is not an isolated event but seems to be part of a broader trend impacting luxury brands and retailers throughout the year. Other brands that suffered similar breaches include Cartier, owned by Richemont, and labels under LVMH. In July, a data leak affecting approximately 419,000 customers at LVMH’s Louis Vuitton was being investigated by Hong Kong’s privacy watchdog.

    The stolen customer data reportedly includes names, email addresses, phone numbers, addresses, and the total amounts spent at the brands’ stores. Notably, Kering has reassured that no financial information, such as credit card or bank account numbers, was stolen during the attack.

    The hackers, referring to themselves as “Shiny Hunters,” allege to have data associated with 7.4 million unique email addresses.

    In response to the breach, Kering stated that its brands promptly reported the incident to the relevant authorities and notified customers in accordance with local regulations. However, Kering did not provide a response when questioned about the countries impacted by the cyber attack.

    Questions & Answers

    What brands were affected by the cyber attack?
    The affected brands include luxury labels Gucci, Balenciaga, and Alexander McQueen, all owned by French parent company Kering.

    What kind of customer information was stolen during the breach?
    Reportedly, the stolen client data includes names, email addresses, phone numbers, addresses and the total amounts spent at the brands’ stores. However, no financial information like credit card or bank account numbers were compromised.

    How did Kering respond to the cyber attack?
    Kering reported that its brands immediately disclosed the breach to relevant authorities and notified customers as per local regulations. However, they did not comment on the specific countries affected by the attack.