Customers shop at a GUCCI luxury store in Shanghai, China.
Cfoto | Future Publishing | Getty Images
Kering said it expects a return to growth this year even as it posted another quarter of sales declines on Tuesday, with its biggest sales driver, Gucci, continuing to lag in new CEO Luca de Meo’s first quarter at the reins.
The company, which also owns brands 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), a slight beat according to FactSet estimates.
Its flagship label Gucci, posted a 10% decline on a comparable basis in the quarter, also slightly better than consensus, while the other houses posted flat or moderate growth year-on-year.
“2025 was not the year we wanted,” CEO Luca de Meo said on an earnings call. “It didn’t reflect the full potential of Kering, and we all know it.”
In 2025, sales fell 10% to 14.7 billion euros. Recurring operating income was down 33% from last year, with its operating margin also declining to 11.1% in the period as a result of weaker sales.
Shares jumped as much as 14% and were last seen up 10.3%, however, the stock is down nearly 14% so far this year.
The positive sentiment spilled over into the broader luxury space, benefiting Burberry, which gained 3.4% in early trade, Hermes, last seen 3% higher, and Italy’s Brunello Cucinelli, which added 2.7%.
Shares of French luxury conglomerate LVMH were 1.4% higher, while Switzerland’s Richemont gained 2%.
Kering shares year-to-date
Kering, like peer LVMH and other fashion players, has seen its business suffer over the past few years, following a boom in demand during Covid-19, which led to price hikes that alienated customers. Paired with weak consumer demand from China — formerly one of the sector’s main growth drivers — and strategic missteps, the fortunes of Kering and others have declined.
The appointment of Demna as artistic director of Gucci is intended to help sales and get the firm’s reputation back on track. His first collection, “La Famiglia,” was launched last year.
The market is now eagerly awaiting signs that attempts by De Meo — whose surprise appointment last year marked the company’s first outsider CEO — to turn Kering around are starting to bear fruit. De Meo was recruited from the auto industry, and his experience included turning around the struggling automaker Renault at the start of the decade.
The start of a turnaround?
“These results point to a slight improvement, all across the board of the Kering brand portfolio and activities,” said Bernstein analyst Luca Solca. “Whether this could be a precursor for an inflection, moving brands like Gucci to growth in FY26E as consensus currently anticipates, will be the key investment case debate.”
Kering said it sees a “return to growth and margin improvement” in 2026, but was light on further details regarding its outlook. It’s expected to present a longer-term plan and guidance at the company’s Capital Markets Day in April.
“Since the second half of the year, I can assure you, we have been taking action decisively to put the group back on the right trajectory,” De Meo said, adding that the group is still “far from” where they want to be.
One of De Meo’s actions has been deleveraging the company’s balance sheet, and selling its beauty segment to L’Oreal for 4 billion euros in an attempt to tackle the group’s high net debt and focus on its core fashion business.
“Our objective is clear, reignite desirability and prepare the next cycle of growth, house by house, product by product, client by client,” De Meo said.
The new CEO also noted Kering is preparing to enter the wellness and longevity segment, “a space where we want to play and where we know value and growth will be created,” and added that the company’s jewelry strategy will be further unveiled in April.
“[Kering’s] closing stages of 2025 confirm gradually reducing pressures at a time of more supportive industry conditions,” noted Jefferies analyst James Grzinic. Investors will be keen to hear more from De Meo first impressions, “with considerable cost savings potential, an inevitable area of focus,” the analyst added.