Kering’s Decline Accelerates in the First Half of 2025

The challenge ahead looks daunting for Luca de Meo, Kering's new CEO, who will officially take the helm of the group in September, following the general meeting scheduled for September 9. The man who successfully turned around Renault will have to tackle a complex situation at the luxury goods giant.

The Pinault family empire recently published its results for the first half of the current financial year. The figures speak for themselves: the group posted a 15% drop in sales on a comparable basis, with total revenue of €7.6 billion. The group's net profit, meanwhile, plunged 46% to less than €500 million, which greatly disappointed analysts.

While the results are once again disappointing, CEO François-Henri Pinault, who has always advocated a long-term vision, remains stoic and optimistic. In a press release, he stated: “The efforts made over the past two years have laid a solid foundation for the next stages of Kering's development, with a clear strategy for transformation and innovation.” The group is banking on a major reorganization, which is crucial for its future.

Several factors explain these negative results. The continued weakness of Kering's brands, particularly its flagship Gucci, remains a major problem. Despite revamping its collections and attempting to redefine its brand identity, it is struggling to turn things around. The global luxury market, which is highly dependent on travel and tourist spending, is also suffering from the effects of declining tourism, particularly in Asia and Europe, as well as a contraction in consumer spending, which has had a direct impact on global sales.

Another factor weighing on Kering's results is the uncertainty surrounding trade policies, particularly the Trump administration's recently announced tariff increases, which will ultimately amount to 15% on products imported from the European Union to the United States. Once implemented on August 1, these new tariffs could negatively affect Kering's profit margins, particularly on products sold in the United States, a key market for the brand. These trade tensions, coupled with economic volatility, are adding further pressure to an already delicate situation.

Regarding the performance of the group's various brands, Gucci, as mentioned above, remains in a deadlock. Generating nearly 50% of Kering's revenue in the first half of 2025, it saw its sales fall by 26% (published data), reaching $3 billion. This decline is particularly worrying as competition, notably from LVMH, continues to grow. The company will not present its first Demna-designed fashion show until March 2026, which is expected to be a key moment in revitalizing the brand and attracting new customers. This long interval without major events could further weaken the brand's image if it fails to maintain its appeal to consumers.

Yves Saint Laurent, another flagship brand of the group, also recorded an 11% drop in revenue, to €1.29 billion. This reflects a slowdown in sales of high-end collections, despite efforts to reach a younger and more diverse customer base.

However, two brands in Kering's portfolio stand out positively: Kering Eyewear (+3%) and Bottega Veneta (+2%). Supported by its timeless style and craftsmanship, Bottega Veneta achieved €846 million and continues to strengthen its market position, while Kering Eyewear appears to be benefiting from the growing enthusiasm for luxury eyewear and collaborations with other major brands.

The Pinault family has significantly diversified its investments in recent months, particularly in fast-growing sectors such as tech and new markets. 2025 is set to be a pivotal year for the company as it focuses on building a solid foundation for growth and reinventing itself in an increasingly competitive market. CEO François-Henri Pinault has emphasized the need to “streamline our distribution and cost base,” a move that has become all the more urgent in order to turn around Gucci's performance. The company is also focusing on innovation and sustainability, with a particular emphasis on reducing its carbon footprint and integrating more ethical practices into its production processes.