Market & Industry

Kering Charts Transformation Amidst 13% Sales Decline in 2025

Close-up of a Pomellato Nudo ring in rose and white gold with diamonds and topaz. - nationaljeweler.com

Kering, the global luxury group, is embarking on a significant transformation as it revealed a 13 percent revenue decline for the full year 2025, totaling €14.68 billion ($17.47 billion). The company reported a 10 percent decrease on a comparable basis. Despite the challenging overall performance, Kering is setting a clear objective to return to growth and improve margins in 2026.

Facing Financial Headwinds

The luxury titan's revenue for the fourth quarter ending December 31, 2025, fell 9 percent (3 percent on a comparable basis) to €3.91 billion ($4.65 billion). This downturn reflects a broader challenging year for the global luxury sector, impacted by softer consumer demand, weaker tourism, and market normalization. Kering’s income statement shows a significant decline from its peak revenue of over €20 billion in FY 2022. By 2025, revenue had contracted by nearly 28% compared to FY 2022. Gross profit also saw a substantial reduction, falling from €15.198 billion in 2022 to €10.660 billion in 2025. Operating income experienced the sharpest decrease, dropping from €5.395 billion in 2022 to just over €1 billion in 2025. Net income fell nearly 89% year-on-year in FY 2025 to approximately €140 million, impacted by restructuring charges and transformation costs.

“The performance in 2025 does not reflect the group’s true potential,” stated Kering CEO Luca de Meo. “In the second half, we took decisive actions—strengthening the balance sheet, tightening costs, and making strategic choices that lay the foundations for our next chapter.”

Gucci's Continued Reset, Jewelry Brands Shine

Kering's star brand, Gucci, significantly weighed on its balance sheet, with sales down 22 percent for the year and 16 percent in the fourth quarter. The brand continues its multi-year reset, accounting for 41% of total Group revenue in FY 2025 but facing significant sales pressure. A notable development was the appointment of Demna as Gucci’s new Artistic Director in March 2025. While the financial impact of the new creative direction was limited in FY 2025, the launch of the “La Famiglia” collection in September 2025 contributed to improved brand engagement and stronger retail traction in Q4.

In contrast, Kering’s jewelry brands demonstrated robust growth. Boucheron, Pomellato, and Qeelin all posted strong performances in Q4. Boucheron saw double-digit sales growth, while Pomellato maintained a steady trajectory. Dodo’s sales also performed well, and Qeelin held onto its strong momentum. These brands are part of Kering’s “Other Houses” division, which, despite a 4 percent Q4 revenue decline (up 3 percent on a comparable basis), showed resilience.

Strategic Roadmap for Growth

Kering is preparing for a strategic reset, with a new roadmap to be presented on April 16 during its Capital Markets Day. This plan will focus on “well-defined brand strategies, a more effective organization, and strong financial discipline.” The company aims to restore profitability, strengthen operational agility, and revise brand desirability. Key initiatives include streamlining operations, elevating brand positioning, and rebuilding financial flexibility.

Looking ahead to 2026, Kering’s focus remains on navigating an uncertain macroeconomic environment by prioritizing flawless execution. The company aims to equip each House with sharper, more sustainable brand strategies and the necessary operational support to accelerate progress.

Divestment of Kering Beauté

Kering also announced the divestment of its beauty division, Kering Beauté, to L’Oréal for €4 billion. This strategic move, announced in October 2025 and expected to complete in the first half of 2026, reclassifies the division as discontinued operations and is seen as a pragmatic approach to market engagement. Kering Beauté was established in 2023 to develop beauty arms for brands like Bottega Veneta and Balenciaga and included the acquisition of luxury fragrance house Creed. The partnership with L’Oréal is expected to enhance brand potential, particularly for Gucci’s fragrance and beauty products, through L’Oréal’s marketing expertise.

Regional and Channel Performance

North America showed relative resilience, with Q4 sales up 2 percent on a comparable basis, although full-year sales were down 5 percent in 2025. Asia-Pacific remained Kering Group’s weakest-performing region during FY 2025, with comparable revenue declining 15%, primarily due to subdued luxury demand in China and reduced tourist flows impacting Japan and Western Europe. The group also continued to tighten wholesale distribution, with wholesale revenue declining 9 percent on a comparable basis, reflecting strategic rationalization efforts.