Gucci, the renowned luxury fashion brand, is bracing for a 20% sales slump in the first quarter due to market slowdown in Asia. This projection was released by Kering, the Paris-based conglomerate that owns Gucci.

The luxury market has seen substantial growth over the past decade. However, recent years have not been as impressive. Gucci, which is estimated to derive more than a third of its sales from China, is feeling the impact of a struggling Chinese economy.

Kering’s statement indicates that the profit warning “reflects a steeper sales drop at Gucci, notably in the Asia-Pacific region”. The company is set to report its financial results on April 23.

Gucci contributed to two-thirds of Kering’s group operating income last year. Kering’s portfolio also includes other renowned brands such as Yves Saint Laurent, Balenciaga, and Bottega Veneta.

In contrast to Gucci’s anticipated sales drop, rivals LVMH and Hermès have shown resilience. LVMH, the owner of Louis Vuitton, Moët & Chandon, and Hennessy, reported higher-than-expected sales for 2023. Hermès also celebrated record annual sales last year, planning to reward all employees worldwide with a bonus.

Gucci targets younger, aspirational shoppers who are more susceptible to economic pressures. In response to the changing market dynamics, Kering made changes to Gucci’s top management last year. Jean-François Palus was appointed as its CEO, and Sabato De Sarno took over as its creative director.

The first items of De Sarno’s Ancora collection were released in mid-February. The collection has received a “highly favourable reception,” according to Kering’s statement.