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Reading: Kering Faces Slow Recovery as Gucci Sales Lag Continues
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Gucci Sales
PhotoNews Pakistan > Business > Kering Faces Slow Recovery as Gucci Sales Lag Continues
Business

Kering Faces Slow Recovery as Gucci Sales Lag Continues

Web Desk
By Web Desk Published February 12, 2025 4 Min Read
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Gucci. Photo Credits: FIV Magazine
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Gucci continues to experience sluggish sales, and the company has not appointed a new chief designer to revitalize the iconic Italian label. Despite an early boost, Kering shares levelled off as initial optimism about the company reaching a turnaround point waned.

In the fourth quarter, the luxury group reported a 12% decline in sales compared to the previous year, with Gucci’s sales dropping by 24%. Gucci, responsible for nearly half of Kering’s sales and two-thirds of its recurring operating profit, remains a significant concern. However, better-than-expected performances from smaller brands like Bottega Veneta provided positive news.

Analysts at RBC noted, “These results should reassure investors that trends are modestly improving against low sentiment and favourable positioning.”

Kering CEO Francois-Henri Pinault commented on the situation, stating, “We have reached a point of stabilization, from which we will gradually resume growth. I have absolutely no doubts about Gucci’s comeback.”

Kering’s fourth-quarter sales were hit by a 24% slump in its main brand Gucci. Despite this, shares in the French group jumped in early trade as investors welcomed an improvement in its performance in China and the US https://t.co/KkL09a9lsI pic.twitter.com/cf3T5jalxC

— Reuters Business (@ReutersBiz) February 11, 2025

Pinault mentioned that the recovery in sales might be gradual in 2025, with a focus on cost control, including plans to close about 50 of its 1,800 stores, a third of which are outlets.

Following the recent dismissal of Sabato de Sarno, Gucci’s designer, Kering executives have yet to announce his successor. However, they emphasized that De Sarno’s tenure helped return the brand to classic elegance. “We are ready today to move on and deliver the creativity we need; it’s time for a new artistic direction,” Pinault added.

The sluggish fourth-quarter sales at Gucci highlighted ongoing challenges in attracting new business with its aesthetic overhaul. Analyst expectations for a rebound were set for next year, with warnings that a new designer might delay progress.

Kering Reports 12% Slump In 2024 Revenues To $17.8B As #Gucci Posts Another Quarter Of Weak Sales#Forbes

For More Details: https://t.co/mMgI1fmqsi pic.twitter.com/VIRka47YcJ

— Forbes Middle East (@Forbes_MENA_) February 11, 2025

The broader industry is experiencing a slow sales rate, exacerbated by a property crisis in China. Kering’s Finance Chief Armelle Poulou noted improvements, with sales in mainland China and among Chinese shoppers globally increasing by six percentage points compared to the third quarter, and U.S. sales also rising.

Once a leading success story between 2016 and 2020 due to Alessandro Michele’s baroque, gender-fluid designs, Gucci has struggled to adapt to shifts in consumer preferences. In contrast, rivals such as LVMH’s Louis Vuitton and Dior have capitalized on the robust demand for post-pandemic goods.

For the full year, Kering’s recurring income from group operations totalled 2.6 billion euros, slightly exceeding the guidance of 2.5 billion euros set in October.

Kering’s price-to-earnings ratio over 12 months, based on projected earnings, is 19, trailing behind LVMH at 24 and Moncler at 25, and notably Burberry, which is undergoing a revamp under new management and has soared to 60, according to LSEG data.

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