(Photo courtesy of Franchester)
Contents
Kering had a rough start to the year with its shares falling considerably on Thursday.
Italian glamour is facing a serious crisis as Gucci’s sales slipped a steep 25%, well below expectations. Despite slower store traffic across all of Kering’s fashion houses, the group is doubling down on its strategy to push Gucci even further into premium territory.
Kering Faces a Harsh Reality as First-Quarter Sales Disappoint
(Photo courtesy of Reuters)
Shares of Kering stumbled after the French multinational holding giant reported weaker-than-expected first-quarter sales and flagged even tougher macroeconomic conditions ahead.
According to its Wednesday report, the fashion powerhouse saw revenues plunge 14% from a year ago to 3.9 billion euros ($4.4 billion), falling short of the 4.01 billion euros LSEG analysts had forecasted.
This hit especially hard because Gucci, which brings in nearly half of Kering’s total revenue, saw its sales tumble 25% on a comparable basis to 1.57 billion euros — as efforts to turn the brand around are still very much in progress.
This could be a sign that the luxury sector is bracing for another rocky year, with consumers in the U.S. and China — the industry's two biggest powerhouses — cutting back on high-end purchases.
The Group Trims Its Store Network Amid Slumping Sales
(Photo courtesy of La Conceria)
Kering’s first quarter was anything but smooth. The group ended up closing 25 stores, bringing its directly managed network down to 1,788 units. Retail — which drives 73 percent of the group's revenue — fell by 16 percent, and wholesale numbers weren't much better, down 9 percent.
Safe to say that this isn’t the company's strongest season, with a 25% plunge in Asia and a 13% dip across both North America and Europe weighing heavily on performance.
Luxury Sector Braces for a Tougher Road Ahead
(Photo courtesy of Glamour)
Kering Chairman and CEO François-Henri Pinault acknowledged the company’s "difficult start to the year" and warned that more challenges could be looming for the struggling luxury sector.
In a statement, he emphasized that the company is fully focused on pushing ahead with its action plans to meet strategic and financial goals while working to strengthen the positioning of its Houses across all markets.
“We are increasing our vigilance to weather the macroeconomic headwinds our industry faces, and I am convinced that we will come out stronger from the present situation,” he assured.
Gucci Bets Big on Demna—Could It Actually Pay Off?
(Photo courtesy of Vogue)
Last May, Kering and Gucci announced that Demna would step in as the House’s new Artistic Director, starting in early July 2025. Demna, who has been leading Balenciaga’s creative direction since 2015, is set to offer the first glimpse of his vision for the struggling luxury house this September.
As the prestigious Italian label faces serious hurdles, Demna is emerging as a beacon of hope for its next chapter.
“Demna is going to build on the vision of the brand. He’s going to bring desirability and fashionability, but it’s a build-up, not a cancelation,” deputy chief executive of Kering, Francesca Bellettini, said Wednesday night (per WWD).
While recognizing that outdated carryover styles hurt Gucci’s performance this quarter, Bellettini said the strong results from the new Emblem, B Bag, and Softbit handbag collections held up well despite lower foot traffic, giving them strong confidence in the draw of new launches.
Kering's strategy for revitalizing Gucci includes significant enhancements to its beloved Ophidia and Marmont collections, alongside efforts to streamline its supply chain for quicker market releases.
Looking ahead, there's a buzz of excitement about Demna's role in reshaping Gucci's iconic designs. "Demna for sure will be reinterpreting the icons," confirmed Bellettini.
Even with a bit of optimism in the air, Kering’s chief financial officer, Armelle Poulou, was straightforward about the uphill battle.
She described the environment as “harsher than anyone anticipated” and admitted that Kering is bracing for another double-digit revenue drop in the second quarter. Still, she left room for some hope, suggesting the second half of the year should shape up better than the rocky first.
Soaring Prices Push Shoppers Toward Secondhand Luxury Platforms
(Photo courtesy of natalie anne via Pinterest)
The slowdown that's shaking up giants like Gucci is part of a bigger trend — the entire fashion industry is feeling the chill, as highlighted in the State of Fashion 2025 report.
For the first time since 2016 (not counting the pandemic chaos of 2020), luxury value creation is expected to fall short of the previous year, marking a major shift for an industry used to constant growth.
The luxury sector’s momentum isn’t what it used to be. Price hikes have hit their ceiling, and those soaring costs are now scaring off the active shoppers who once fueled the boom.
For many, the solution might just be found in the fast-growing secondhand luxury market on online platforms like ZenLuxe, where authentic pieces and friendlier price tags go hand in hand.
Indeed, affordable luxury is more important than ever, but the customer base itself is becoming broader and more dynamic, and with that comes a more complicated, almost love-and-hate relationship with the brands they support.
Now, with clients increasingly craving luxury experiences over just high-end goods, all eyes are on Gucci’s new era under Demna. If he’s about to flip the script, it’s only a matter of time before the fashion world watches it all unfold.
About The Writer
Meet Mariam — a fashion writer who lives and breathes all things vogue and glamour. For her, the most therapeutic aspect of fashion goes beyond simply shopping for the latest styles that appear in stores; it’s fully experiencing this glamorous world from the little details to the big moments (there's nothing quite like the thrill of flipping through a sleek fashion magazine, is there?).
