A Gucci logo is displayed at their store on May 30, 2025 in Washington, DC.
Kevin Carter | Getty Images News | Getty Images
Gucci-owner Kering on Tuesday posted worse-than-feared second-quarter results and flagged ongoing geopolitical uncertainty as woes persist at the beleaguered luxury group.
Sales at the high-end fashion house dropped 15% year-on-year on a comparable basis to 3.7 billion euros ($4.27 billion), compared to the 3.96 billion euros forecast by LSEG analysts.
Gucci sales, which typically make up nearly half of total group revenues, plunged 25% over the quarter to 1.46 billion euros.
Chairman and CEO François-Henri Pinault acknowledged the results as disappointing, but noted ongoing efforts to course correct the struggling luxury giant.
“Though the numbers we are reporting remain well below our potential, we are certain that our comprehensive efforts of the past two years have set healthy foundations for the next stages in Kering’s development,” Pinault said in a statement accompanying the results.
“In an economic and geopolitical environment that remains uncertain, Kering continues to deploy its strategy with the aim of achieving a profitable long-term growth trajectory,” the company added.
The group, which also owns the Saint Laurent and Bottega Veneta brands, said sales were weaker across all markets, led by Japan and the wider Asia Pacific.
“Kering is facing a tough reality as its two main luxury markets, China and the United States, are under strain,” Yanmei Tang, analyst at Third Bridge, said in emailed comments shortly after the earnings release.
New leadership in focus
Kering’s share price is currently down 8% year-to-date as investors have questioned the company’s ability to turn itself around after several consecutive quarters of soft sales.
The appointment in June of auto veteran Luca de Meo as group CEO brought positive momentum, with his appointment set to take effect from Sept. 15.
“[De Meo] has a really strong track record in turning around businesses but also in branding,” Carole Madjo, head of European luxury goods research at Barclays, told CNBC’s “Squawk Box Europe” last week.
The incoming CEO nevertheless has a tough task ahead of him, as the industry faces the prospect of new 15% tariffs on imports to the U.S. as well as broader concerns around consumer spending, particularly in the key Chinese market.
We may consider a second wave [of price hikes] in the autumn.
Armelle Poulou
chief financial officer of Kering
Chief financial officer Armelle Poulou said Tuesday that the 15% tariff rate was in line with assumptions and would be “manageable through pricing adjustments,” adding that the company had already implemented some price hikes in the second quarter.
“We may consider a second wave in the autumn,” Poulou told an earnings call. “[But] we will make sure we are applying it in a smart way, mindful of consumer sentiment.”
Still, analysts suggest the bigger challenge will be reviving the company’s image and desirability, including under Gucci’s new artistic director Demna Gvasalia, while simultaneously not alienating existing consumers.
Kering’s deputy CEO and brand development lead, Francesca Bellettini, said that a “first hint of [Demna’s] vision for Gucci” would come in September, with full roll out of the collection due in early 2026.
“Product desirability is now a bigger problem for Kering than any tariff threat,” Tang said. “Desirable brands like Hermès can nudge prices higher without hurting demand, but brands such as Saint Laurent and Gucci do not currently enjoy that level of pricing power.”
“Bringing newness, something fresh which has not been seen before, is, I think, what could make Gucci great again,” Madjo added.
