Kering's Sales Decline Amidst Leadership Changes and Future Growth Promises

Kering, the luxury conglomerate known for brands such as Gucci, Yves Saint Laurent, and Balenciaga, reported a 3% decline in fourth-quarter sales, totaling 3.9 billion euros ($4.64 billion). This performance, while still a decrease, was better than analysts' expectations of a 5% drop. The decline in sales was primarily driven by Gucci, which experienced a 10% decrease, marking its tenth consecutive quarterly decline. However, this was less severe than the anticipated 12% fall, indicating some signs of stabilization.

CNBC

Luca de Meo, who took over as CEO in September 2025, is spearheading a restructuring effort aimed at revitalizing Kering's brands and addressing its significant debt load. De Meo acknowledged the challenges faced by the company, stating, "2025 was not the year we wanted... it didn't reflect the full potential of Kering." He emphasized a commitment to growth and improved margins in 2026, asserting that "the momentum is real - early, fragile, but real."

Reuters

Despite the reported decline in sales and a net loss of 29 million euros, Kering's stock surged by over 10% following the earnings announcement. Investors reacted positively to de Meo's reassurances about future growth and margin improvements. The company has already begun reducing its store network, closing 75 boutiques, and has implemented cost-cutting measures, reducing operating costs by 9% year-over-year.

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Critics have pointed out that Kering's struggles are indicative of broader challenges within the luxury sector, which has faced a downturn over the past two years. Analysts have noted that while Kering's shares have risen approximately 50% since de Meo's appointment, the company still lags behind competitors like LVMH, which reported a 22% operating margin last year. The luxury market's recovery remains uncertain, and Kering's ability to adapt to changing consumer preferences will be crucial.

The stock market welcomes Kering’s 2025 results

Looking ahead, de Meo is expected to unveil a comprehensive strategy revamp in April, which may involve increased oversight of Kering's brands, primarily based in Italy. This strategic shift aims to streamline operations and enhance brand performance. The upcoming catwalk show by new creative director Demna is also anticipated to play a pivotal role in reinvigorating Gucci's brand image.

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• “It didn't reflect the full potential of Kering, and we all know it.” — Luca de Meo, CEO

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• “We will see growth in 2026, we will see increasing margins on all the brands,” — Luca de Meo, CEO

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• “Four or five years ago, we were on top of the world, and then something went wrong and we found ourselves on our knees.” — Luca de Meo, CEO

Reuters

Kering's recent performance highlights the complexities of navigating a challenging luxury market while undergoing significant leadership changes. The company's future will depend on the successful implementation of de Meo's strategies and the ability to adapt to evolving consumer demands.

Reuters