Key Takeaways
- Kering SA (EPA:KER) said Gucci’s third-quarter sales fell 6% on a comparable basis, worse than the roughly 5.4% decline analysts expected and a setback after a 2% drop in the second quarter.
- Group revenue of €3.35 billion was flat as reported and in line with forecasts, supported by Saint Laurent, Bottega Veneta, jewelry and eyewear.
- Kering’s U.S.-traded ADRs fell more than 4% after the release, which came out after the Paris close; the main test in Paris comes Friday.
Kering SA (EPA:KER) reported third-quarter revenue after the Paris market closed on Thursday, Oct. 22, showing that the turnaround at Gucci, its largest and most profitable brand, lost momentum. Group revenue was €3.35 billion, stable on a reported basis and down 1% on a comparable basis, which strips out currency swings and acquisitions. That was close to the roughly €3.34 billion analysts expected.
Kering’s American depositary receipts, which trade over the counter in the U.S. (OTC:PPRUY), fell more than 4% in U.S. trading after the release.
Gucci Loses Ground Again
Gucci generated €1.29 billion in sales, down 4% as reported and 6% on a comparable basis. Analysts had expected a decline of about 5.4%, according to WWD. Sales in Gucci’s own stores fell 9%, with weaker foot traffic in Asia Pacific, especially mainland China, and in Japan. Wholesale revenue rose 45%, but from a low base, and accounted for only about a tenth of the brand’s sales.
North America was the brand’s most resilient market, with improvements in conversion, average prices and average transaction size. Kering also said the quarter lacked the boost from new product that lifted the second quarter, when creative director Demna’s first collections reached stores more broadly.
Chief Executive Luca de Meo said the quarter reflected the phasing the company had anticipated, in a softer economic environment, and called Gucci’s recovery the group’s defining priority.
The Rest of the Portfolio
Excluding Gucci, retail sales in the Fashion & Leather Goods division grew 2%, led by Saint Laurent, Bottega Veneta and Brioni, while Balenciaga’s ready-to-wear and shoes remained weak. The division overall fell 3% on a comparable basis to €2.74 billion.
Kering’s smaller businesses did better. Kering Jewelry rose 11% to €239 million, and Kering Eyewear grew 4% to €373 million. For the first nine months, group revenue was €10.57 billion, down 2% as reported and flat on a comparable basis.
What It Means for the Business
Gucci’s weight makes its trend decisive. The brand produced nearly 40% of third-quarter revenue and, according to Reuters, about half of group profit, so declines there weigh on earnings more heavily than growth at smaller houses can offset.
Kering confirmed its target of improving its recurring operating margin in 2026, a measure of profit from ongoing operations. De Meo, who took over in September 2025, has said he aims to roughly double that margin from 11.1% in 2025 by the end of the decade through cost cuts, leaner supply chains and store closures. Kering has closed a net 105 stores so far this year and now plans at least 125 for the full year.
Cost discipline can support margins, but analysts cited by Reuters have warned that efficiency alone will not restore growth if the brands do not regain appeal with shoppers.
Industry Context
Kering’s report fits a broader slowdown in luxury fashion tied to China. LVMH Moët Hennessy Louis Vuitton SE (EPA:MC) reported on Oct. 12 that organic sales in its fashion and leather goods division fell 5% in the third quarter, reversing growth in the second quarter. U.S. demand has been the steadiest source of support across the sector.
Why Investors Should Care
The quarter weakens the case that Gucci’s recovery is gathering pace. Group revenue met forecasts and the margin goal still stands, but the brand that drives most of Kering’s profit moved backward after an encouraging second quarter.
Investors should watch Friday’s trading in Paris, fourth-quarter Gucci sales against an easier comparison, signs of a turn in China and the full-year margin due early next year. The key question is whether new collections can lift store traffic, not just prices, enough to return Gucci to sustained growth.