A customer shops at a GUCCI luxury store in Shanghai, China.
Photo | Future Publishing | Getty Images
kering said it expected a return to growth this year, despite Gucci, its biggest sales driver, recording another quarterly sales decline on Tuesday as it continued to lag in the first quarter under new CEO Luca de Meo.
The company, which also owns brands such as Yves Saint Laurent, Bottega Veneta and Balenciaga, said fourth-quarter sales fell 3% on a comparable basis to 3.9 billion euros ($4.64 billion), although FactSet estimates showed slightly higher sales.
Its flagship brand Gucci recorded a 10% decline on a comparable basis in the quarter, also slightly above consensus, while other brands recorded flat or modest growth year over year.
“2025 was not the year we had hoped for,” CEO Luca de Meo said at an earnings conference. “This was not a reflection of Kering’s full potential. We all know that.”
Sales in 2025 decreased by 10% to 14.7 billion euros. Ordinary operating income decreased 33% compared to the same period last year, and the operating profit margin also fell to 11.5% due to sluggish sales.
Shares have soared 14%, and are down nearly 14% so far this year, after rising 10.3% last time.
The positive sentiment spilled over into the wider luxury space and brought benefits. burberryup 3.4% in early trading, hermeslast seen increasing by 3%, while Italy’s Brunello Cucinelli increased by 2.7%.
Shares in French luxury conglomerate LVMH rose 1.4%, while shares in Switzerland rose 1.4%. Richemont Increased by 2%.
Kering stock year to date
So is Kering LVMH Fashion-related companies such as Yahoo! Co., Ltd. have suffered a deterioration in performance over the past few years due to a surge in demand due to the coronavirus disease (Covid-19) and soaring prices that are causing customers to turn away. Coupled with weak consumer demand from China, once one of the sector’s main growth drivers, and strategic missteps, the fortunes of Kering and others declined.
Demna’s appointment as Gucci’s artistic director is aimed at boosting sales and getting the company’s reputation back on track. His first collection “La Famiglia” was launched last year.
The market is now waiting for signs that Mr. DeMeo’s efforts to turn Kering around (he was suddenly appointed as the company’s first outside CEO last year) are beginning to bear fruit. Mr. DeMeo was hired by the automobile industry and gained experience including turning around an ailing automaker. renault At the beginning of the decade.
The beginning of a turnaround?
“These results indicate a slight improvement in the overall Kering brand portfolio and activity,” Bernstein analyst Luca Sorca said. “A key investment discussion will be whether this could herald a turnaround for brands like Gucci to grow in the second half of FY26, as consensus currently predicts.”
Kering said it expected a “return to growth and improved margins” in 2026, but did not provide further details about its outlook. The company plans to announce long-term plans and guidance at its Capital Markets Day in April.
“Since the second half of this year, we have taken decisive action to put the group back on the right track,” DeMeo said, adding that the group was still “far from” where it wanted to be.
One of DeMeo’s actions was to deleverage the company’s balance sheet and sell its beauty division to the United States. loreal The €4 billion acquisition was aimed at addressing the group’s high net debt and allowing it to focus on its core fashion business.
“Our goal is clear: to reignite demand and prepare for the next cycle of growth, home by home, product by product and client by client,” DeMeo said.
The new CEO also noted that Kering is preparing to enter the wellness and longevity space, “an area that we want to be in and where we know there will be value and growth,” adding that the company’s jewelery strategy will be further announced in April.
“(Kering’s) end of 2025 confirms that pressure is gradually easing as industry conditions become more supportive,” Jefferies analyst James Gruzinich said. Investors will want to hear more from DeMeo’s first impressions, the analyst added: “There is significant cost savings potential and this is a logical area of focus.”
