Coronavirus: Gucci owner scraps ad campaigns and store openings in China
Luxury giant Kering, which owns fashion houses Gucci and Balenciaga, has said the coronavirus outbreak in China will hit sales trends and tourism flows in one of its major markets.
The company has halted new store openings and ad campaigns in response to the deadly epidemic. in China which has seen cities go into lockdown and shopping districts resemble ghost towns.
Despite the stark warning, Kering posted stronger-than-expected sales for the fourth quarter, boosted by its flagship brand Gucci.
Shares in Paris-listed Kering were trading up around 3.5 per cent this afternoon.
However, the numbers for that quarter were boosted in-part by mainland China sales before the outbreak, which had offset a decline in Hong Kong revenue affected by the pro-democracy protests there.
For the three months to 31 December Kering posted revenue of €4.36bn (£3.67bn), up 11.4 per cent on a like-for-like basis, which strips out currency changes.
That was broadly in line with its performance in the quarter prior and ahead of analyst expectations, despite sales halving in Hong Kong, according to the luxury giant’s boss Jean-Marc Duplaix.
For the full year Kering posted global revenues of €15.8bn, up 13.3 per cent on a like-for-like basis compared to 2018.
However, net profit sunk 37.7 per cent to €2.3bn after the company had to pay a one-off tax settlement to the Italian government, related to its star brand Gucci.
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Virus hit
The coronavirus warning is the latest in a string from luxury brands, which have for years been boosted by the consumption trends of China’s growing middle class.
London-listed Burberry last week Burberry withdrew its financial guidance for 2020 and said it had closed more than a third of its shops in mainland China.
That followed Michael Kors and Versace owner Capri Holdings saying it would take a $100m hit from coronavirus in China, where it was forced to close more than 150 stores.
Posh puffer jacket maker Moncler warned this week that footfall at its stores in China had plunged 80% since the coronavirus outbreak.