Investors are bracing for a notable downturn in luxury sales as companies prepare to release their first-quarter results, reflecting weakened demand from China, reported Reuters. Kering's unexpected forecast of a 10 percent decline in first-quarter sales, contrasting with the 3 percent anticipated by analysts, has already cast a shadow over the reporting season, primarily attributed to a sales slump in Asia, notably from its flagship label Gucci, raising concerns about broader high-end fashion brand performance in China.
The slowdown is exacerbated by reduced spending from Chinese tourists in destinations like Hong Kong, Macau, and Singapore, contributing to Kering's lower valuation compared to peers like LVMH and Hermes. Following Kering's announcement, its shares fell by 15 percent, alongside declines of 7 percent for LVMH and 2 percent for Hermes, Reuters noted, underlining uncertainties surrounding the recovery of luxury goods demand amid easing comparative figures.
Analysts project a slowdown in global luxury sales growth to mid-single-digit percentages, significantly lower than last year's nearly 9 percent, signaling challenges amidst changing consumer preferences and economic uncertainties.
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