Sales of Kering's flagship brand, Gucci declined by 25 per cent Y-o-Y during Q1, FY25 even as Kering’s sales declined by 14 per cent Y-o-Y adding to the growing concerns of another challenging year for the luxury sector. US President Donald Trump's recent tariff announcements have further fueled recession fears, dampening consumers' appetite for high-end fashion.
Cited by HSBC, a Visible Alpha consensus of analysts had predicted a 9.7 per cent decline in overall group sales and a 19 per cent decline for Gucci, which accounts for roughly half of Kering's total revenue and two-thirds of its profit.
The group is increasing its vigilance to navigate the macroeconomic headwinds faced by the industry, states Francois-Henri Pinault, Chairman and CEO.
Store traffic across the group, which also owns fashion houses Yves Saint Laurent, Bottega Veneta, and Balenciaga, remained weak in most regions, according to Armelle Poulou, Chief-Finance.
The group’s sales in Asia plummeted by 25 per cent Y-o-Y in Asia, while sales in Western Europe and North America contracted by 13 per cent. Kering has closed 25 stores so far this year. In February 2025, the company’s executives indicated their plans to close approximately 50 of their 1,800 stores, a third of which are outlet locations, to reduce costs.
Kering's sales report disappoints low expectations, notes Bernstein analysts, adding that the much-anticipated rebound at Gucci is ‘yet to appear.’ Kering recently appointed in-house talent Demna as Gucci's new design chief, triggering another stock selloff from investors who had hoped for a prominent external hire.
Demna has already begun working with Gucci teams, Poulou stated, while declining to specify when the designer's first collection will be showcased on the runway.
The change in designer, officially taking effect in July, is likely to further delay the label's long-awaited recovery, analysts cautioned. Predecessor Sabato De Sarno, who was dismissed after less than two years in the role, had been recruited in 2023 to reset Gucci, including streamlining sales channels and targeting wealthier clients.
