Kering failed to break its downward trend in the final quarter of 2025, as results once again came in below expectations. A 10% revenue decline at flagship brand Gucci pushed the Italian fashion house into its tenth consecutive quarter of contraction, underscoring the challenges facing the French luxury group.
In an effort to shore up its financial position, Kering closed 75 boutiques during the year. However, the measures were not enough to prevent a sharp deterioration in cash generation, with free cash flow plunging 35%, intensifying investor focus on the turnaround strategy of CEO Luca de Meo.
In a statement released on Tuesday, Kering said fourth-quarter sales fell 3% year-on-year on a constant-currency basis to €3.9 billion. While the decline was slightly better than analysts’ expectations for a 5% drop, it did little to ease broader concerns over the group’s financial health. Investors are now awaiting concrete recovery plans from CEO Luca de Meo, who took office in June and initially drove significant volatility in the company’s shares.
Gucci Records Tenth Straight Quarterly Decline
Gucci, which accounts for the largest share of Kering’s profits, is experiencing one of the most difficult periods in its history. Despite outperforming forecasts that pointed to a 12% fall, the brand still posted a 10% revenue decline, marking ten consecutive quarters without growth.
Chief Financial Officer Armelle Poulou said that new handbag launches and recently introduced collections had generated modest signs of improvement in certain regions toward the end of the year, though these developments have yet to translate into a broader recovery.
Kering’s current struggles can be traced back to shifting consumer preferences following the decline in popularity of former star designer Alessandro Michele’s maximalist aesthetic in 2022. As the group attempts to adapt to changing tastes and the rise of the “quiet luxury” trend, it remains under close market scrutiny due to high leverage and weakening profitability.
Excluding one-off proceeds from real estate sales, Kering’s free cash flow fell 35% last year to €2.3 billion.
75 Boutiques Closed
Facing an uncertain economic environment, Kering has taken decisive steps to improve efficiency across its major brands, including Gucci, Balenciaga, Bottega Veneta and Yves Saint Laurent. The company reduced its retail footprint by 75 boutiques, signaling that further closures at underperforming locations may follow.
According to JPMorgan analyst Chiara Battistini, Kering’s top priority should be to “regain the broad-based global appeal that once defined the group.”
Source: Patronlar Dünyası/ Prepared by: İlayda Gök