Gucci isn't just a brand for Kering. It’s the engine room. When that engine stutters, the whole ship slows down, and right now, the smoke coming from the hood is hard to ignore. For Luca De Meo, the man charged with steering this luxury giant back into clear waters, the recent numbers are more than just a dip. They’re a loud, clear signal that the "quiet luxury" pivot is taking a lot longer to pay off than anyone hoped.
The reality is stark. Kering’s 2025 revenue hit €14.7 billion, which sounds like a lot until you realize it’s a 13% drop from the previous year. Gucci itself saw a massive 22% decline in reported revenue. If you’re looking for someone to blame, you’ve got plenty of options: a cooling Chinese market, a creative direction that hasn't quite clicked with the masses, or simply the brutal cyclical nature of high fashion. But for De Meo, the "why" matters less than the "what now."
The Sabato De Sarno Gamble
When Sabato De Sarno took over the creative reigns from Alessandro Michele, the goal was a total vibe shift. Out with the maximalist, geek-chic explosion that defined the last decade; in with a sleek, minimalist aesthetic. It was supposed to be sophisticated. It was supposed to be timeless.
Instead, it’s been a bit of a slog. Retail sales for Gucci dropped 18% on a comparable basis in 2025. It turns out that when you strip away the eccentricity that made a brand a global phenomenon, you have to replace it with something equally compelling. So far, the "Gucci Ancora" aesthetic hasn't sparked the same gold-rush frenzy. De Sarno actually exited the company in early 2025, less than 18 months into the job. That’s a corporate blink of an eye. Now, with Demna Gvasalia—the mind behind Balenciaga—stepping into the Gucci spotlight, the strategy is shifting again.
Diversification as a Survival Tactic
De Meo isn't just sitting around waiting for Gucci to find its soul. He's trying to build a moat. The recent launch of Kering Jewelry is a perfect example. By grouping powerhouses like Boucheron, Pomellato, and Qeelin under one roof—and putting Group COO Jean-Marc Duplaix in charge—Kering is trying to capture the more stable, hard-luxury market.
Hard luxury (watches and jewelry) tends to be less volatile than fashion. While clothing trends can die in a season, a gold necklace is forever. Or at least, its value is.
- Kering Eyewear is actually a bright spot, growing 3% in a year where everything else was red.
- Bottega Veneta managed to stay stable, proving that the "super-high-end" customer is still spending.
- Saint Laurent took a 6% hit, but maintained a 20% operating margin. That's efficiency in action.
The China Problem
You can't talk about a Gucci slump without talking about China. For years, the Chinese middle class fueled double-digit growth for Kering. But the post-pandemic rebound there has been more of a "thud" than a "bounce." Consumer confidence is shaky, and the "luxury shame" trend—where people avoid flaunting wealth during economic uncertainty—is real.
When your biggest brand is down 10% in the fourth quarter alone, you can't just blame the weather. Kering is facing a fundamental question: is Gucci still the "cool" brand, or has it become the brand your older sister used to wear? Reclaiming that cultural relevance while trying to sell €3,000 handbags in a high-interest-rate environment is a nightmare scenario.
Cutting Costs Without Cutting Soul
De Meo is currently walking a tightrope. He has to cut costs—recurring operating income dropped 33% to €1.6 billion—but he can't cut the marketing spend that keeps the brands alive. You can't save your way to a luxury turnaround. You have to spend your way out of it through better products, better stores, and better stories.
The group is freezing headcounts and streamlining supply chains. They're also selling off real estate in Paris and Tokyo to free up cash. It’s a "batten down the hatches" moment. The goal is to survive the 2025-2026 transition so they can thrive when the global economy eventually warms up.
What This Means for the Luxury Market
If Kering is struggling, it's a warning for everyone. While LVMH and Hermès seem somewhat insulated due to their sheer scale and "ultra-luxury" status, Kering represents the "aspirational" luxury sector. These are the people who save up for one big purchase a year. If those people are stopping, the industry has a problem.
Don't expect a quick fix. Turnarounds in fashion take years, not quarters. You have to design the clothes, get them into stores, and then convince a very fickle public that they need them.
Next steps for Kering watchers:
- Watch the Demna transition: His first full collection for Gucci will be the make-or-break moment for the brand's new identity.
- Monitor the Jewelry build-out: If Duplaix can scale Boucheron globally, it provides a much-needed hedge against fashion volatility.
- Check the margins: If Saint Laurent and Bottega can keep their margins high while sales are flat, the group remains fundamentally healthy despite the Gucci weight.
The Gucci slump isn't just a corporate headache; it’s a test of whether a modern luxury conglomerate can reinvent its flagship while the world is watching. De Meo has the plan, but the market is notoriously impatient.
