Owner of iconic brands like Gucci, Saint Laurent, and Bottega Veneta, luxury conglomerate Kering announced worse-than-forecast results in Q2, FY25. The group's sales contracted by 15 per cent Y-o-Y on a comparable basis to €3.7 billion ($4.27 billion), falling short of LSEG analysts' projection of €3.96 billion.
The most significant hit came from Gucci, which typically accounts for nearly half of Kering's total revenues. Sales at the high-end fashion house declined by 25 per cent over the quarter to €1.46 billion.
François-Henri Pinault, Chairman and CEO, says, though the numbers being reported by the company remain well below their potential, their comprehensive efforts of the past two years have set healthy foundations for the next stages in Kering’s development. The company reiterated commitment to achieving long-term profitable growth despite the uncertain economic and geopolitical climate.
Kering reported weaker sales across all its markets, with Japan and the wider Asia Pacific region leading the decline. Yanmei Tang, Analyst, Third Bridge, notes, the company is facing a tough reality as its two main luxury markets, China and the United States, are under strain.
The appointment of auto veteran Luca de Meo as group CEO in June, effective September 15, has brought a wave of positive sentiment. Carole Madjo, Head –Research, European Luxury Goods, Barclays, highlights de Meo's really strong track record in turning around businesses but also in branding.
However, de Meo faces significant headwinds. The luxury industry is bracing for potential new 15 per cent tariffs on imports into the US, alongside broader concerns about consumer spending, especially in the crucial Chinese market. Armelle Poulou, Chief Financial Officer, indicates, the company had factored in the 15 per cent tariff rate and would manage it through pricing adjustments, with some price hikes already implemented in Q2 and a potential second wave in the autumn.
Analysts suggest, Kering's more pressing challenge lies in reviving brand image and desirability, particularly for Gucci under the leadership of Demna Gvasalia, new Creative Director. Francesca Bellettini, Deputy CEO, Kering, confirms, Gucci will roll out their first collection in early 2026. The company is focused on creating product desirability rather than pondering over any tariff threat, Tang concludes.
