PPR Gucci see China as more challenging

Chinese consumers have been cultivating a new-found appetite for less high-profile, logo-centric brands such as PPR‘s Balenciaga and Yves Saint Laurent. “We see that the taste is going for more sophisticated products and the market is tougher but we believe we have the right strategy for Gucci,” PPR CFO Jean-Marc Duplaix told analysts on a conference call about China. “In Tier 1 (most populated) cities, the competition is quite fierce, the more dynamic cities are Tier 2 (less populated).”

Gucci’s sales in China, which had enjoyed high double-digit growth in recent years, reached “high single digits” in the third quarter of 2012 but were “above 10 percent” on a nine-month basis, he said, adding he was confident Gucci’s margins would improve this year.

Gucci, the world’s No.2 luxury brand behind Louis Vuitton, in terms of sales, confirmed a slowdown in the luxury sector as its revenue growth decelerated to 7 percent in the third quarter from 10 percent in the second and 12 percent in the first.

Gucci store, Shanghai, China