Kering's Fourth Quarter Performance: A Mixed Outlook Amid Leadership Changes
Kering, a prominent luxury conglomerate, recently released its financial results for the fourth quarter of fiscal year 2025, ending December 31. The company announced a 3% decrease in sales on a constant currency basis, reaching €3.9 billion. This outcome, however, surpassed market predictions of a 5% decline, leading to an 11% surge in Kering's stock during early trading hours. This performance indicates a potential stabilization in the luxury market, despite ongoing challenges.
A notable aspect of Kering’s performance was the impact of its flagship brand, Gucci, which experienced a 10% year-on-year drop in sales for the fourth quarter. Despite this downturn, it still managed to outperform consensus estimates of an 11.5% decrease. The company's earnings statement highlighted that the introduction of the 'La Famiglia' collection, launched in September and progressively rolled out since January, alongside other new offerings, contributed to a renewed interest in the Gucci brand. Looking ahead, Demna's inaugural show for Gucci's Fall/Winter 2026 collection is scheduled for February 27, sparking anticipation for the brand's future direction. Meanwhile, other brands within the Kering portfolio presented a more favorable picture: Saint Laurent maintained stable sales, demonstrating continued improvement, while Bottega Veneta saw a 3% increase. The 'other houses' division, encompassing brands such as Balenciaga, Alexander McQueen, and Boucheron, also recorded a 3% sales growth. Furthermore, Kering's eyewear and corporate sales increased by 2%.
Luca Solca, a luxury goods analyst at Bernstein, noted that these results suggest a slight enhancement across Kering's diverse portfolio. He emphasized that the crucial question for investors will be whether this improvement signals a broader inflection point, potentially propelling brands like Gucci back to growth in 2026, as current market consensus anticipates. Geographically, sales in the Asia-Pacific region, Japan, and Western Europe each saw a 6% to 7% decline year-on-year in Q4. Conversely, sales in North America rose by 2%, and by 3% in the rest of the world. In comparison to competitors, LVMH reported a 1% organic sales growth in its fourth quarter, reaching approximately €22.7 billion, though its fashion and leather goods segment declined by 3%. Richemont posted an 11% increase in sales at constant exchange rates during the same quarter. For the entirety of 2025, Kering's revenues decreased by 10% year-on-year to €14.7 billion. Gucci's sales amounted to €6 billion, a 19% drop, while Saint Laurent's sales were €2.6 billion, down 6%. Bottega Veneta achieved €1.7 billion in sales, up 3%, and other houses garnered €2.9 billion, down 6%. The group's recurring operating income for 2025 also saw a significant decline of 33%, settling at €1.63 billion.
Kering's CEO, Luca de Meo, who joined the company in September, expressed that the 2025 performance does not fully represent the group's potential. He highlighted the decisive actions taken in the latter half of the year, including strengthening the balance sheet, controlling costs, and making strategic decisions to prepare for the company's next phase. De Meo is expected to unveil his detailed roadmap at the Capital Markets Day on April 16. He affirmed the entire team's commitment to creating a more agile and efficient Kering, focusing on enhancing brand positioning, boosting sales, rebuilding margins, and strengthening cash generation to ensure sustained, long-term value creation. Many industry observers are optimistic that the recent changes in leadership will yield positive results. Citi managing director Thomas Chauvet observed that Kering's shares have outperformed the luxury sector in 2025, following a period of underperformance, attributing this to a 'hope trade' driven by the appointments of Luca de Meo as group CEO and Demna as Gucci's designer. He anticipates a consensus for 2026 group sales of €15 billion, a 5% year-on-year increase, with Gucci contributing to this growth by 5%. This period of transition and strategic realignment for Kering underscores the dynamic nature of the luxury market, where innovation and strong leadership are key to navigating evolving consumer preferences and economic shifts.