The Washington, DC Gucci logo will be displayed in stores on May 30, 2025.
Kevin Carter | Getty Images News | Getty Images
Gucci owner Kering on Tuesday announced continued geopolitical uncertainty as he struggled with the suffering high-ranking group, making fearful second-quarter results worse and flagging continued geopolitical uncertainty.
Sales at high-end fashion houses fell 15% on a peculiar basis to 3.7 billion euros ($4.27 billion) compared to the forecast of 3.96 billion euros by LSEG analysts.
Gucci’s sales, which normally account for almost half of the group’s total revenue, plummeted by 25% to 1.46 billion euros over the quarter.
Chairman and CEO François Henri Pineau admitted that the outcome was disappointing, but noted the continued efforts to fix the struggling luxury giant.
“The numbers we report are well below our potential, but we are confident that comprehensive efforts over the past two years have set a healthy foundation for the next phase of Kering’s development,” Pinault said in a statement accompanying the results.
“In an economic and geopolitical environment that remains uncertain, Kering continues to develop 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 are weak in all markets led by Japan and the broader Asia-Pacific.
“Kelling is facing a harsh reality as two major luxury markets, China and the US, are tense,” Third Bridge analyst Yang Mei Tang, commented in an email shortly after the revenue release.
New Focused Leadership
Kering’s stock is currently down 8% per year as investors question their ability to turn themselves around after several quarters of soft sales.
The June appointment of car veteran Luca de Meo as group CEO is expected to take effect from September 15th, bringing positive momentum.
“(de Meo) has a very strong track record not only to turn the business around, but also in branding,” Carol Maggio, head of European luxury goods research at Barclays, told CNBC’s Squawk Box Europe last week.
Nevertheless, the next CEO has done a difficult job before him. This is because the industry faces new 15% tariffs on imports into the US and wider concerns about consumer spending, particularly in major Chinese markets.
We may consider a second wave of fall (of price hikes).
Armelle Poulou
Kering’s Chief Financial Officer
Chief Financial Officer Armelle Poulou said on Tuesday that the 15% tariff rate would be “controllable through price adjustments,” adding that the company had already implemented price increases in the second quarter.
“We might consider a second wave of fall,” Poulou said in a revenue call. “(But) we make sure we apply it in a clever way, with consumer sentiment in mind.”
Still, analysts suggest that under Gucci’s new artistic director Demna Gvasalia, a bigger challenge, including not alienating existing consumers at the same time, will revive the company’s image and desirability.
Francesca Bellettini, Kering’s Associate CEO and brand development lead, said “Gucci’s (Demna’s) vision’s first hint” will arrive in September, and will fully roll out the collection in early 2026.
“Product desirability is a greater problem for kelling than joint threats,” Tan said. “While desired brands like Hermes can increase prices without damaging demand, brands like St. Laurent and Gucci currently do not enjoy that level of pricing power.”
“I think what makes Gucci great again by bringing something fresh we’ve never seen before,” Madjo added.
