Gucci Sales Fall as Kering Seeks Turnaround Under New CEO

Kering SA reported a 10% decline in comparable revenue at its flagship brand Gucci during the fourth quarter of 2025. The drop, slightly less than the 10.4% forecast by analysts, highlights ongoing challenges for the French luxury group. The brand has seen a 10th consecutive quarter of sales declines, driven by shifting consumer tastes and weaker demand in key markets like China according to Bloomberg.

Luca de Meo, who took over as Kering's CEO in September, is pushing for a swift turnaround. Since his appointment, he has restructured leadership at Gucci and announced a €4 billion sale of the company's beauty division to L'Oréal. These moves aim to reduce debt and refocus the business on core brands as reported by Bloomberg.

Gucci's fourth-quarter recurring operating income fell to €966 million, down 40% from the previous year. Analysts had expected a similar figure of €911 million. The performance underscores the brand's struggle to regain its position in a competitive luxury market according to Bloomberg.

Why Did This Happen?

Gucci's decline has been attributed to the waning popularity of its maximalist aesthetic, led by former creative director Alessandro Michele. The brand's recent pivot under Demna has yet to fully resonate with consumers. In addition, the broader luxury sector has been impacted by macroeconomic pressures and reduced discretionary spending, especially in Asia as Reuters reports.

Kering's overall revenue in the quarter fell 3% in comparable terms to €3.9 billion, better than the 5% decline analysts had anticipated. The improvement was led by stronger performances in the electrical power segment of the group's other businesses according to Investing.com.

How Did Markets React?

Kering's shares have lost 14% in 2026, contrasting with a 26% rally in 2025 driven by optimism around de Meo's leadership. The stock has underperformed peers like LVMH, which also recently posted weaker-than-expected results. Market participants are closely watching whether de Meo's restructuring efforts will lead to improved margins and revenue growth as Bloomberg notes.

Gucci remains the largest contributor to Kering's profits, accounting for about 60% of its earnings last year. However, its declining sales and weaker operating margins have raised concerns about the company's long-term profitability and ability to compete with larger rivals according to Bloomberg.

What Are Analysts Watching Next?

Kering's finance chief, Armelle Poulou, noted that Gucci saw some improvement in late 2025, driven by new product launches and stronger handbag sales. Investors are waiting for more detailed guidance from de Meo during his Capital Markets Day on April 16. The event will outline his strategic vision for the group, including how to restore Gucci's appeal and improve overall performance as reported by Bloomberg.

Analysts have emphasized the need for a stronger product pipeline and clearer cost discipline. JPMorgan's Chiara Battistini noted that restoring global desirability for Gucci is a top priority. The brand's upcoming show in Milan, featuring creative director Demna, will be a key test of its ability to re-engage consumers according to Reuters.

Kering's broader restructuring includes a planned reduction in its store network and a shift in focus toward higher-margin categories. These steps are aimed at improving operational efficiency and strengthening the company's financial position as it faces continued uncertainty in the luxury market as Reuters reports.

The company's 2025 results reflect a net loss of €29 million, a stark contrast to its €1.02 billion profit in 2024. This was primarily due to restructuring costs and optimization measures. De Meo has acknowledged that 2025 did not meet expectations but believes it laid the groundwork for a recovery in 2026 as WWD reports.

Kering is now under greater pressure to deliver on its turnaround strategy as it navigates a challenging economic environment. With the luxury sector still grappling with weak demand and geopolitical uncertainty, the success of de Meo's plan will be critical in determining the company's future trajectory according to MarketWatch.