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Gucci sales down 25 percent, impact of geopolitical uncertainty
Kering, the parent company of the world-famous luxury goods brand Gucci, reported worse-than-expected results in the second quarter of the year. The company is going through a deep crisis. They also cited ongoing geopolitical uncertainty for this situation.
Gucci sales down 25 percent, impact of geopolitical uncertainty
Kering’s sales in the April-June quarter fell 15 percent to 3.7 billion euros compared to the same period last year. Although analyst firm LSEG had estimated that sales would be around 3.96 billion euros at this time.
Almost half of Kering’s total revenue comes from Gucci. But Gucci’s sales fell 25 percent to 1.46 billion euros during this period. Chief Executive Francois-Henri Pinault admitted that the results were disappointing. He claimed that the company was working continuously to turn around the luxury group. Pinault added, “The figures we are publishing are still far below our potential.” However, the hard work of the past two years has laid a solid foundation for future development.
Kering also said that despite economic and geopolitical uncertainties, they are moving forward with a strategy of long-term profitable growth. Kering owns not only Gucci, but also several well-known brands including Saint Laurent and Bottega Veneta. However, this time sales have fallen in all markets. The biggest blow came from Japan and the Asia-Pacific region.
Third Bridge analyst Yanmei Tang said that Kering is facing a difficult reality. Because its two main luxury markets, China and the United States, are now under pressure.
Eye on new leadership
With sales continuing to be weak, investors are questioning whether Kering will be able to turn around at all. This has affected the company’s share price. The company’s share price has fallen by 8 percent so far this year.
In this situation, Luca de Meo, a veteran executive in the automotive industry, was appointed as the new group CEO in June. He will take charge from September 15.
Carol Madjo, head of European luxury research firm Barclays, told CNBC that De Meow has a positive track record in restructuring businesses and building brands.
However, Meow faces a tough road ahead. There is a threat of a new 15 percent import tariff in the United States. There is also a fear of a slowdown in consumer spending, especially in the Chinese market.
Kering Chief Financial Officer Armel Pulu said on Tuesday that the 15 percent tariff was within their understanding. It can be handled through price adjustments. The prices of some products have been increased in the second quarter.
Pulu said that a second round of price increases could also be considered in the fall. But it must be done wisely, keeping in mind consumer sentiment.
Restoring image is a big challenge
According to market analysts, the biggest challenge facing Kering is not tariffs, but restoring the appeal and image of the brand. In the meantime, the new industrial director Demna Gvasalia has been given the responsibility of repositioning Gucci.
Francesca Bellettini, Kering’s deputy CEO and head of brand development, said that the first glimpse of Gucci’s new vision under Demna’s hand will be seen in September. The full stock will arrive in early 2026.
Analyst Yanmei Tang said that for Kering, tariffs are now a bigger problem than the product. Brands like Hermes can maintain demand by raising prices, but Gucci or Saint Laurent no longer have that ability.
Barclays’ Madzo believes that Gucci can return to the top only if it can innovate. To come up with novel products, they need to come up with something that has not been seen before.
