Updated 1:51 p.m. ET on Feb. 10
PARIS — Kering is betting that short-term pain will deliver long-term gain.
The owner of brands including Gucci, Saint Laurent and Balenciaga said Tuesday it will close at least 100 more stores this year as it continues to trim loss-making or underperforming locations as part of the radical restructuring launched by chief executive officer Luca de Meo.
The former Renault chief, who took over the ailing luxury group in September, is due to present his strategic roadmap at a Capital Markets Day in Florence on April 16.
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Speaking after the company reported its third consecutive year of falling sales, de Meo said he expected his strategy to start delivering results this year — a message that sent Kering shares soaring by 11 percent.
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“This revenue level reflects the low point of the cycle and the starting point of our rebound,” he said. “We will see growth in 2026 and increasing margin for all the brands.”
Kering said fourth-quarter revenues fell 9 percent at reported exchange rates to 3.91 billion euros, representing a decline of 3 percent in comparable terms. The figures beat a consensus of analyst estimates, which had called for a 5 percent organic drop in sales to 3.83 billion euros.
Gucci also showed a sequential improvement, with organic revenue declining 10 percent, slightly better than the 11 percent decrease forecast by analysts, as creative director Demna’s impending runway debut on Feb. 27 stokes interest in the group’s star brand.
For the full year, Kering posted a net loss of 29 million euros, versus a net profit of 1.02 billion euros in 2024, reflecting nonrecurring items mostly related to optimization and restructuring measures.
Recurring operating profit was down 33 percent to 1.63 billion euros, and the recurring operating margin fell to 11.1 percent in 2025 from 14.5 percent the previous year. Gucci accounted for 59 percent of the group’s operating profit last year.
De Meo said that despite the bleak annual figures, he was encouraged by the group’s performance in the second half.
“I spend time every weekend in our stores, seeing the teams, talking to clients, feeling the product, and I can tell you, there is energy coming back,” he said. “The momentum is real — early, fragile, but real — and I can guarantee you that we will build on it.”
Catching Up
De Meo took rapid action to tackle Kering’s bulging debt load by selling the Kering Beauté division to French beauty giant L’Oréal for 4 billion euros, and offloading majority stakes in key real estate assets, including a flagship property on Fifth Avenue in New York City.
As a result, the group ended 2025 with a net debt of 8.04 billion euros, down from 10.5 billion euros the previous year. It achieved 925 million euros in cost savings last year, cutting group operating expenses by 9 percent.
With 75 net store closures, Kering ended the year with 1,719 directly operated stores. Gucci shuttered 25 full-price boutiques, mainly in the Asia-Pacific region, with further reductions planned this year.
De Meo said that with a new management team led by president and CEO Francesca Bellettini and “one of the most talented designers on the planet,” he was confident in prospects for Gucci. “I’m actually very optimistic,” he said. “A lot of signals are coming that Gucci is back on the radar, and this is only the beginning.”
He noted that after years of lagging the competition, Kering is catching up to its sector peers. Most of its luxury divisions saw organic sales growth in the fourth quarter.
Saint Laurent was flat, and the “other houses” group, which includes Balenciaga and Alexander McQueen, reported a 3 percent increase, as did Bottega Veneta. Comparable sales in the Kering eyewear and corporate division were up 2 percent.
By comparison, organic sales at LVMH Moët Hennessy Louis Vuitton’s key fashion and leather goods division fell 3 percent year-over-year in the fourth quarter, broadly in line with consensus estimates. Hermès International is due to report fourth-quarter results on Thursday.
The Kering figures for 2025 and 2024 were restated to reflect the Kering Beauté divestment, expected to close in the first half of 2026. The beauty division’s activities have been reclassified as discontinued operations.
De Meo said the deal with L’Oréal has the potential to open up new revenue streams as the two partners explore business opportunities at the intersection of luxury, wellness and longevity.
“We believe this segment will be an integral part of the next phase of luxury, and a space where consumers with significant purchasing power will increasingly allocate their spending,” he said.
“Importantly, we see the chance to build something that does not exist today. While it carries an element of risk, it also represents a compelling opportunity for differentiation, growth and profitability. It would allow us to serve our customers in a distinctive way that others in the industry have not yet begun to address,” he added.
De Meo also sees strong potential in jewelry, following Kering’s staged acquisition of family-owned Italian manufacturer Raselli Franco Group. “It gives us more control, more know-how, and more capacity to scale,” he noted.
Its jewelry brands, including Boucheron, Qeelin and Pomellato, contribute roughly 1 billion euros a year to group revenues. De Meo also wants to ramp up the jewelry offering of the fashion brands, noting that 10 years ago, Gucci was doing three times the business in that category.
Straight Shooter
His assessment of Kering’s past shortcomings was frank, and at times blunt. A luxury outsider who by his own admission is still learning, he’s made several key hires from the car sector and is reorganizing the group to create more transversal positions designed to maximize brand synergies.
Daniele Zito, previously president of Gucci Japan, has been named to the new position of chief commercial officer, charged with defining a strategy that unites retail, wholesale and e-commerce channels for the first time. And de Meo expects to announce new hires soon to streamline upstream activities like manufacturing and logistics.
“What really makes me optimistic is that there’s a lot of common sense in the conversations we’re having at Kering. I mean, the level of bulls–t has decreased considerably. We speak openly, take on issues one at a time and work through them together as a team,” he said.
Regarding Italian trade unions’ concerns about the restructuring of McQueen, he said he had no choice but to cut deep and fast, as the brand has incurred heavy losses by opening 135 stores worldwide and allowing itself to become excessively reliant on sneaker sales, which at one point represented 80 percent of its revenues.
De Meo said more than half of those stores could be shuttered “without mercy,” with some locations transferred to other brands within the group. “What do you want me to do? I don’t run a charity,” he said. “We have to make [tough] decisions, but we obviously respect the history and the potential of the brand.”
However, he said an outright sale was unlikely, especially as it would be difficult to find a buyer willing to pay an attractive price for the brand. Instead, he plans to fine-tune McQueen’s offering as part of a broader effort to develop brand platforms designed to clarify the scope of each house.
“Think of it as a team sport. You put a football or basketball team on the field, and every player has a clearly defined role. They wear the same colors — they’re all part of Kering — but they contribute in different ways,” he said.
De Meo said former CEO François-Henri Pinault, who remains chairman of Kering, has been open to his suggestions and criticism, and there are no “sacred cows” as far as his reorganization efforts are concerned.
On that note, de Meo appears keen to demystify the role of the creative director, saying they have for too long been seen as brand saviors, instead of highly valuable members of a larger team — like the strikers in a soccer club.
He recently invited Demna, Saint Laurent’s Anthony Vaccarello, Boucheron’s Claire Choisne, Balenciaga’s Pierpaolo Piccioli and Bottega Veneta’s Louise Trotter to take part in a three-day workshop for a cross-section of Kering employees.
“There were people there who had never seen an artistic director in real life,” he said incredulously. “And they show up, and they have two arms, two legs, two eyes and two ears.”
De Meo’s punchy tone landed well with the market.
“Kering seems to be moving in the right direction,” said Luca de Solca, analyst at Bernstein, noting that the prospect of margins stabilizing at Gucci this year, even without top-line growth, indicates the beleaguered group may finally have touched bottom.