Luxury group Kering reports Gucci sales slump as turnaround plan faces fresh pressure

Luxury group Kering reported a slump in sales at its key brand Gucci during the first quarter, dealing a setback to the turnaround plans of new chief executive Luca de Meo.

Sales at Gucci, which accounts for about 60 per cent of the French group’s profit, tumbled by 8 per cent on an organic basis in the first three months of the year, compared with a year ago. Analysts had estimated they would fall by 4.7 per cent, according to consensus estimates from Visible Alpha.

In a statement on Tuesday (Apr 14) de Meo said Gucci “remains our top priority” and that a “comprehensive turnaround is under way”.

That turnaround is being complicated by the US and Israel’s war with Iran, which drove an 11 per cent reduction in Kering’s retail sales in the Middle East in the first quarter, the Paris-listed group said.

Despite that hit Kering, which also owns Saint Laurent and Balenciaga, reported overall revenues for the quarter of €3.57 billion (US$4.21 billion; S$5.35 billion), in line with its performance a year ago, boosted by strong sales of jewellery and eyewear.

Gucci’s disappointing performance raises questions over whether new creative director Demna Gvasalia, known mononymously as Demna, and chief executive Francesca Bellettini can quickly reinvigorate demand at a brand that has experienced double-digit percentage revenue declines in each of the past two years.

Kering said that Demna’s first collection — some of which was available to buy immediately following his runway debut in spring — is gaining traction with consumers.

But Gucci is battling considerable challenges in China, historically the brand’s most important market. Kering’s chief financial officer, Armelle Poulou, said the brand is working to rebuild its image and upgrade its stores in the country, where group sales fell by a mid-teens percentage in the first quarter.

By contrast rivals including LVMH have reported improving sales in China in recent quarters following a sharp downturn.

Kering’s results add to evidence of the toll that the Iran war is taking on luxury spending. On Monday industry leader LVMH reported that the conflict had reduced group sales growth by 3 percentage points in March.

Kering has 79 stores in the Middle East, which represents about 5 per cent of its retail revenues. Poulou said that after some disruptions, the region’s retail network was back to being “fully operational today”.

Analysts at RBC said it was “encouraging” that Kering reiterated its goals to return to sales growth and improve margins in 2026 despite the Middle East conflict, which they estimate reduced group revenue growth by one percentage point in the quarter.

De Meo, who arrived from carmaker Renault in September, has moved quickly to cut Kering’s debt and close stores. The luxury group struck a deal to sell its beauty division to sector leader L’Oreal for €4bn at the start of the year.

On Thursday (Apr 16) he will announce his full turnaround plan to revive growth after two years of dramatic declines in revenue and profit amid an industry-wide downturn.

Poulou said that Kering’s ambition was to return all brands to growth this year, with the exception of McQueen, which is lossmaking.

Adrienne Klasa © 2026 The Financial Times.

This article originally appeared in The Financial Times.