Kering Reports Gucci Sales Slump as Turnaround Plan Faces Pressure
Luxury conglomerate Kering reported an 8 percent decline in first-quarter sales for its flagship brand, Gucci, missing analyst estimates and intensifying pressure on CEO Luca de Meo’s turnaround strategy. The slump occurred despite De Meo’s assertion that a comprehensive revival plan is underway. External geopolitical factors, specifically the conflict between the US, Israel, and Iran, contributed to an 11 percent drop in retail sales in the Middle East. Additionally, Gucci continues to struggle in China, its most critical market, where sales fell by a mid-teens percentage, contrasting with rival LVMH’s recent improvements there. While overall group revenue remained stable at €3.57 billion due to strong performance in jewelry and eyewear, Gucci’s persistent double-digit declines over the past two years raise concerns about the effectiveness of new creative director Demna’s initial collections. Kering has taken strategic steps to stabilize finances, including selling its beauty division to L’Oreal. Analysts remain cautiously optimistic about Kering’s 2026 growth targets, though the brand faces significant challenges in rebuilding its image and store presence in key Asian markets amid ongoing global instability.
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Kering Reports Gucci Sales Slump as Turnaround Plan Faces Pressure
Luxury conglomerate Kering reported an 8 percent decline in first-quarter sales for its flagship brand, Gucci, missing analyst estimates and intensifying pressure on CEO Luca de Meo’s turnaround strategy. The slump occurred despite De Meo’s assertion that a comprehensive revival plan is underway. External geopolitical factors, specifically the conflict between the US, Israel, and Iran, contributed to an 11 percent drop in retail sales in the Middle East. Additionally, Gucci continues to struggle in China, its most critical market, where sales fell by a mid-teens percentage, contrasting with rival LVMH’s recent improvements there. While overall group revenue remained stable at €3.57 billion due to strong performance in jewelry and eyewear, Gucci’s persistent double-digit declines over the past two years raise concerns about the effectiveness of new creative director Demna’s initial collections. Kering has taken strategic steps to stabilize finances, including selling its beauty division to L’Oreal. Analysts remain cautiously optimistic about Kering’s 2026 growth targets, though the brand faces significant challenges in rebuilding its image and store presence in key Asian markets amid ongoing global instability.
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