Gucci, the Italian fashion house, saw revenue fall 34 percent to €3.1 billion in the first half of the year. The company’s operating profit was down 51 percent to €929 million.
Gucci has been restructuring its operation to rely less on third-party production contractors and instead has been buying up suppliers and opening its own factories.
The company said the shutdown and reduced revenue has not changed that strategy.
Overall sales for Kering SA, Gucci’s parent company, fell 30 percent to €5.4 billion for the period.
Kering also owns the Balenciaga, Bottego Veneta, and Saint Laurent fashion brands.
Gucci has lost market share to Dior and Louis Vuitton, two of its main competitors in luxury, both owned by LVMH (Möet Hennessey-Louis Vuitton), which reported an 84-percent hit to profits in 2020’s first half, falling to €522 billion, far below analysts’ expectations.
The company said it was unable to cut costs quickly enough to cope with the loss of sales wrought by the global economic shutdown.
Luxury fashion houses depend on tourists for a significant amount of revenue, a cohort that has been largely locked down at home for the last four months.
Although many of LVMH’s boutiques have reopened in China and are beginning to in Europe, a large number of U.S. sites remain shut due to the COVID virus’s resurgence.
LVMH said it still intends to purchase Tiffany & Co. for $16 billion and is awaiting antitrust rulings on the deal.
