Gucci Revenue Dips by 7% in Q4 of 2022

@Gucci

Kering is the French-based parent company of luxury clothing, apparel, and other high-end brand goods such as Gucci, Balenciaga, Yves Saint Laurent, Bottega Veneta, and Alexander McQueen. Gucci watches, wallets, and handbags are among the luxury brand’s best-selling products.

At the end of 2022’s fourth quarter, sales for the company decreased by 7% due to pandemic-related lockdowns for the Gucci China sector. The reason for the sales decrease also had something to do with the American dollar value increasing slightly in value.

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Hoping for Better Sales in 2023

Jean-Marc Duplaix is the finance chief for the Kering company. He reports that while Gucci did not meet sales expectations for 2022, the company is projecting a better forecast for 2023 as they evaluate different ways to evade the challenges that set Gucci back in the fourth quarter.

Surprisingly, Gucci usually makes up most of its sales portfolio for Kering. However, it was the only company amongst the group of subsidiaries that did not glean a profit for the fourth quarter. Other brands within the company procured a profit for the same quarter, but these numbers failed to meet what the parent company initially projected in sales forecasts.

For all brands within the Kering company, the American sector experienced a 15% dip in sales. The Asian Pacific region had a worse loss in sales at 19%. Besides the dollar becoming higher in value, the Euro’s value reduction affected these experienced sales losses.

@Gucci/ @instagram.com/gucci/

China’s Pandemic Lockdowns

China experienced many pandemic lockdowns even in the early parts of 2022 into the end of the year. The travel restrictions ceased as of January 8, 2023, which means that people traveling to China did not have to self-quarantine before going about their trip as normal. This quarantine law has been in effect for the past three years, which has hindered business success overall in China.

Kering and its investors are not that concerned about China’s pandemic lockdowns since they have been lifted. Even though the situation influenced 2022 sales poorly, the travel restrictions being lifted is just another reason to be hopeful that the China sector of the company’s brands can bounce back and maintain their sales forecast for 2023.

What Does a Strong Dollar Mean?

Americans traveling to foreign countries can convert USD into the country’s currency for where they are visiting and have more of it because of the dollar’s strength. However, people from other countries trying to visit the United States will not have a high value in converting their currency into USD.

Hence, Americans visiting other countries can purchase more from luxury brands during their trip. Foreigners visiting America will not be able to purchase as much when visiting because they could not get as much of their currency converted to USD because of its high value.

Hence, individuals should purchase their favorite luxury goods from Gucci and other brands while they are in their home country so that they have better access to more of the goods. The demand for luxury goods in America has reduced for 2022 because of high inflation rates. People are paying more for their general needs which means they are having less discretionary income to spend if their income did not increase enough to compensate for the inflation of their needed items and services.