French luxury conglomerate Kering reported a significant 15% revenue drop in its second-quarter earnings, with its flagship brand Gucci experiencing a dramatic 25% sales plunge across global markets.
The luxury fashion group’s consolidated revenues fell to 3.7 billion euros ($4.27 billion), substantially missing analyst expectations of 3.96 billion euros. This performance underscores mounting challenges in the high-end fashion sector, particularly in critical markets like China and the United States.
Chairman and CEO François-Henri Pinault acknowledged the challenging landscape, stating, “Though our current numbers remain below our potential, we are confident that our comprehensive strategic efforts of the past two years have established healthy foundations for future growth.”
Market analysis reveals significant headwinds across multiple regions, with particularly pronounced weaknesses in Japan and the broader Asia Pacific territories. Yanmei Tang, an analyst at Third Bridge, characterized Kering’s situation as “facing a tough reality” with its primary luxury markets under substantial economic strain.
The company’s stock performance reflects investor uncertainty, with shares down 8% year-to-date. However, recent leadership changes may signal a potential turnaround. The appointment of automotive industry veteran Luca de Meo as group CEO—effective September 15—has generated cautious optimism among market observers.
Despite potential challenges, including potential 15% import tariffs in the U.S. and ongoing consumer spending concerns, Kering remains committed to strategic repositioning. The incoming leadership will need to navigate complex market dynamics, focusing on brand revitalization and maintaining consumer engagement.
The luxury group’s portfolio, which includes prestigious brands like Saint Laurent and Bottega Veneta alongside Gucci, faces the critical task of rekindling market desirability. This will likely involve innovative design strategies under new artistic direction, including the recent appointment of Demna Gvasalia as Gucci’s artistic director.
Industry experts suggest that Kering’s recovery will depend on its ability to balance brand reinvention with maintaining its existing consumer base—a delicate strategic challenge in the rapidly evolving luxury fashion landscape.
