Kering 2025: moment of truth for François-Henri Pinault's powerhouse

The luxury sector is no longer smooth sailing, and Kering (Kering) has become its most sensitive barometer. With a 13 percent decline in turnover, compressed profitability, and Gucci still undergoing reconstruction, the French group concludes a 2025 financial year that management describes as transitional. Investors, however, see it primarily as a full-scale stress test year.

Behind the corporate jargon about “desirability” and “selectivity”, one question prevails: has the bottom finally been reached?

Sales stop falling, but fail to recover

Kering reports a turnover of 14.7 billion euros (17.51 billion dollars), down 13 percent on a reported basis and 10 percent on a comparable basis.

The fourth quarter marks a slowdown in the decline (-3 percent), an encouraging sign after several half-years of deterioration.

This is encouraging, but still insufficient to signal a genuine cycle reversal.

The retail network continues to struggle, while wholesale is declining as part of a deliberately more controlled distribution strategy.

Real thermometer: margin

The pressure is primarily reflected in profitability, which is the ultimate arbiter for the markets. Recurring operating income falls by 33 percent to 1.6 billion euros. The margin now stands at 11.1 percent, moving dangerously away from the group's historical standards.

The mechanism is well-known: when volumes decrease, the luxury model loses its valuable economies of scale. Even the “strict cost control” cited by François-Henri Pinault is no longer enough to offset the erosion of revenue. Recurring net income is consequently almost halved, at 532 million euros.

Gucci, centre of gravity and risk zone

Accounting for around 40 percent of sales, Gucci remains the primary key to understanding the results. In 2025, the house saw a 19 percent decline on a comparable basis. The fourth quarter shows an improvement (-10 percent), driven by the first new collections, but the recovery remains gradual.

The impact on profitability is severe. Operating income plummets by 40 percent, with the margin falling to 16.1 percent.

For the markets, the equation is crystal clear: no clear restart for Gucci means no re-evaluation of the stock on the market.

Pockets of resistance

Not everything in the picture is bleak. Yves Saint Laurent (YSL) is limiting the damage and has found welcome stability at the end of the financial year, maintaining a margin of close to 20 percent — proof of solid operational discipline.

Bottega Veneta (BV), for its part, confirms the relevance of its ultra-luxury strategy with positive growth; strong traction in the fourth quarter; and improving profitability. These performances prevent the overall balance sheet from turning completely red. However, they are not enough to offset the systemic weight of Gucci.

Financial breathing room built by strategic decisions

Kering highlights a strengthened balance sheet and controlled debt. This improvement, however, stems largely from active asset management, including strategic property disposals. While the balance sheet now offers significantly increased “strategic flexibility”, organic commercial momentum remains the priority project for 2026.

The signal sent to shareholders leaves no room for doubt, as the group has decided to propose an ordinary dividend of three euros, supplemented by an exceptional one euro. This is a way of reminding them that, despite the turbulence, Kering remains in control of its cash and maintains full confidence in its recovery.

April 16: moment of truth

All attention is now focused on the Capital Markets Day on April 10, 2026 — a moment when ambition will become as concrete as it is symbolic.

Organisation, speed of execution, and creative vision: Luca de Meo will have to demonstrate that Kering can once again become a growth engine and not a group managing decline.

The time for diagnosis is over. The time for proof has come.

Conclusion

After long relying on the power of a flagship brand, Kering is now faced with a harsher reality: steering the transformation when the engine is slowing down.

Signs of stabilisation exist.

In 2026, however, the group will no longer be judged on its ability to explain the decline.

It will be expected to demonstrate its ability to recreate desire — quickly, clearly, and sustainably.

This article was translated to English using an AI tool.

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