Kering’s quarterly sales are weaker than expected, with Gucci down 25%

Mimosa Spencer and Tashiro Hammel

PARIS (Reuters) – Gucci owner Kering reported a 15% decline in quarterly revenue on Tuesday, failing to meet market expectations.

Second quarter revenue totaled 3.7 billion euros ($4.3 billion), a 15% drop on a comparable basis, missing a visible alpha consensus estimate for the 13% drop cited by UBS. Gucci, which accounts for the majority of the group’s profits, reported sales of 1.46 billion euros, down 25% from the previous year.

The French group, dominated by the Pineau family of billionaires, faces pressure from investors after two years of sales fell and reduced debt heaps.

Kering’s net debt was 9.5 billion euros as of June, down from 10.5 billion euros at the end of last year, primarily due to real estate sales. The group will also further cut its store network and close to online 80 stores by the end of 2025.

Seeing the stock has lost about 60% of its value in the last 24 months, Kering said last month that it had hired former Renault CEO Luca De Meo as its next CEO since September.

Italians face the challenge of restructuring the group as the luxury sector is plagued by poor performance, as the luxury sector is caused by weaker demand in China and part of the weight of spending elsewhere.

“We’ve already started working with him, so we can run to the ground,” Armelle Poulou, financial director at Kering, said in a revenue call.

A new atmospheric 15% tariff rate on all European Union exports to the US, a key market where Kering earns more than 20% of sales, will be added to the headwinds.

“The impact of tariffs is completely manageable for us,” Poulou said.

Kering’s brands, including St. Laurent and smaller labels, are already increasing prices globally and more specifically by Bottega Veneta and Balenciaga. Porow said the company is taking a measured approach, turning its eyes to consumer sentiment.

“There may be a second price adjustment in the fall,” she said.

(Reporting by Tassilo Hummel; Editing by Mimosa Spencer and Mark Potter)