Updated 2:46 p.m. ET April 14
Gucci remains a stubborn problem child for Kering, with revenues at the star brand falling 14.3 percent in the first quarter to 1.35 billion euros, or 8 percent in organic terms.
The Italian fashion house, now led by former Balenciaga creative director Demna, registered a 7 percent improvement in North America, which could not compensate for enduring weakness in Western Europe and China, where Kering admits it has “issues,” including over-distribution and low cultural relevance.
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“It is easier and faster for the market to believe in a revival, than it is for management to produce it,” was Bernstein analyst Luca Solca’s dry appraisal of the numbers.
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The French company missed market expectations for Gucci in the first quarter, while group revenues decreased 6.2 percent to 3.57 billion euros in the first three months of the year.
Stripping out the impact of exchange-rate fluctuations and changes in scope, group revenues came in flat, which chief executive officer Luca de Meo characterized in a press release as a stabilization, “marking an important first step in our recovery and a further sequential improvement.”
Kering shares fell as much as 10.2 percent on Wednesday morning as investors digested the news.
Group retail sales only improved in North America, by 9 percent, with Japan down 3 percent; Asia-Pacific, 4 percent; Western Europe, 7 percent, and the rest of the world off 8 percent.
Overall, fashion and leather goods sales decreased 3 percent in organic terms and 9 percent in reported terms. Kering no longer provides individual performance figures for Saint Laurent and Bottega Veneta.
During a conference call with analysts, chief financial officer Armelle Poulou said Saint Laurent, Bottega Veneta and Balenciaga all recorded improvements over the fourth quarter, with Bottega performing the strongest. Its other brands in the division include Brioni and McQueen — the latter excluded from the group’s ambition that all brands return to growth in 2026.
Analysts peppered Poulou with questions about Gucci, eager to understand what the green shoots might be, and which pain points persist.
She urged patience.
“While the recovery will be gradual, the fundamentals are being rebuilt in the right order,” she said, pointing to the upcoming cruise show in New York as a key milestone. “With disciplined execution, clearer creative leadership and a sharper focus on core clients and products, we are confident in Gucci’s ability to progressively restore momentum and create long-term value.”
On the plus side, she trumpeted the resilience of some carryover items, including the Giglio, Marmont and Emblem handbags; touted improving conversion rates at Gucci in all regions, including China, and held up North America as “providing early confirmation that the strategic reset is starting to gain traction.”
She acknowledged Gucci has more work to do in China, and a “dedicated plan” is being deployed.
“We have been suffering in China from the fact that the market was not very supportive, but also from the fact that we have our own issues,” she said. “We are rebuilding the cultural elements in China with sharper storytelling, stronger ambassadors and region-specific activations….We are also working to improve and upgrade our store network in China.”
Kering Jewelry, a new unit lead by group chief operating officer Jean-Marc Duplaix, was a rare bright spot, with organic revenues gaining 22 percent to 269 million euros, while Kering Eyewear increased 7 percent to 489 million euros. Boucheron delivered the strongest growth in the group, Kering noted.
Poulou called jewelry a “structural growth engine for the group” and trumpeted the “strength, resilience and scalability” of its eyewear platform. The launch of Valentino eyewear was among the other noteworthy events in the quarter.
The results, released Tuesday after the close of trading on the Paris Bourse, come on the eve of Kering’s Capital Markets Day in Florence, scheduled for Thursday. There, de Meo is to unveil his strategic roadmap under the banner “ReconKering: True Luxury, Next Luxury.”
In a research note Tuesday, RBC analysts Piral Dadhania and Richard Chamberlain said they’re not expecting a “big bang” event, but rather a “timely strategic update” on how the French group envisions a sustainable business recovery.
“We expect the focus to be key organizational changes, access to key leaders — many of whom are new — and brand-specific strategies with outsized Gucci focus given Florence location,” they wrote. “We are encouraged by the steady and visible progress being made at Kering; however, to turn more positive we require evidence of inflecting brand heat for Gucci, which may take further time given unsupportive macro and sector backdrop.”
Gucci accounted for 59 percent of the group’s operating profit in 2025, and on Tuesday, de Meo said the Italian brand remains his top priority.
“A comprehensive turnaround is underway, with decisive actions across client, distribution and, above all, the offer,” he said in a press release. “We have reset the product architecture and strengthened category focus, with new collections rolling out progressively in stores throughout the year.”
Commenting on the Middle East conflict, Kering noted that retail revenues declined 11 percent in the first quarter, reflecting disruptions. The region generates about 5 percent of Kering’s retail revenues and the entire network, comprising 79 stores, was operational as of Tuesday.
“As Kering progresses through 2026, its objective remains to return to growth and improve margins,” the company said.
Since joining Kering last September after a long career in the automotive sector, 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.
Last month, he appointed four executives to head up two group centers of excellence — Industry and Client — in a bid “to optimize its operational efficiency and support the sustainable growth of its houses.”
Analysts are predicting a rebound in luxury sales in 2026 thanks to more creative renewal at many European heritage brands, more attractive price points, buoyancy in the U.S. and improvements in China, though the year is off to a modest start.
At LVMH Moët Hennessy Louis Vuitton, first-quarter revenues decreased 5.9 percent in reported terms to 19.12 billion euros, representing a 1 percent organic increase. Its linchpin fashion and leather goods division saw organic revenues dip 2 percent.
Hermès International is to report its first-quarter performance on Wednesday.