Gucci continues to weigh on results: Kering reports 10 percent revenue decline in Q3

Kering announced a 10 percent revenue decline for the third quarter on Wednesday. This is the first financial release since Luca de Meo took office in September as the new chief executive officer, tasked with getting the luxury group back on track.

Revenue fell to 3.4 billion euros, a decline less severe than in previous quarters. However, according to de Meo, Kering remains “below the market average,” which strengthens his “determination to act at all levels of the company,” as he stated in a press release.

This release comes just days after the announcement of the sale of its beauty division to L’Oréal for four billion euros, which took place overnight between Sunday and Monday. The division was created just under two years ago, following Kering's acquisition of the luxury perfume brand Creed for 3.5 billion euros.

The agreement includes 50-year perfume licences for the core brands Gucci, Bottega Veneta and Balenciaga, as well as a 50/50 joint venture partnership aimed at developing new “experiences and services”.

The sale is intended to help the group, which owns Gucci, Bottega Veneta, Saint Laurent and Balenciaga, reduce its current debt of 9.5 billion euros.

For Kering, according to Luca de Meo in an interview with Le Figaro, this is “not a one-hundred-and-eighty-degree turn, but a way to accelerate the development of our brands in the beauty segment.” He explained, “It is good to do this alone, but better to do it together, especially with the market leader L’Oréal.”

“When we place our brands in the hands of L’Oréal, things will take off,” de Meo continued. L’Oréal will pay Kering licensing fees for the use of the brands. “L’Oréal invests more in the media presence of its perfumes than we do for our fashion brands. We will benefit from this firepower,” he added.

“Lightening the load” and reviving the fashion business

“It was urgent to focus on what we really do best,” said Luca de Meo in Figaro. “The world is moving fast; we have to keep up.” He added that he had “always been convinced that the speed of the game is crucial, and we need to pick up the pace a bit.”

The initial contacts between L’Oréal and Kering began a year ago, before de Meo’s appointment. However, they accelerated after the Italian manager met with L’Oréal chief executive officer Nicolas Hieronimus in the summer, prior to his official start.

“This transaction will help us lighten the load and revitalise our fashion brands, especially Gucci,” emphasised de Meo. The deal is expected to close in the first half of 2026.

Gucci, the most important brand in the luxury group chaired by François-Henri Pinault, accounts for 44 percent of the group’s revenue and two-thirds of its operating profit. However, the brand continues to face a difficult period.

In the third quarter, sales fell by 18 percent to 1.3 billion euros. This was an improvement on the first and second quarters, when revenues had plummeted by 24 percent and 27 percent, respectively.

The partnership with L’Oréal includes the right to conclude an exclusive fifty-year licensing agreement for the development, manufacturing and distribution of Gucci-branded perfume and beauty products. This will take effect after the current licence with the US company Coty expires.

According to several financial analysts, this licence expires in 2028.

“The revenue of Yves Saint Laurent in the beauty sector is now comparable to that in the fashion and leather goods segment, at 2.9 billion euros in 2024,” Luca de Meo explained to Le Figaro. “That gives you an idea of the potential that lies within Gucci.”

This article was translated to English using an AI tool.

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