Kering’s sales dragged down by Gucci weakness

By the Editorial Team · Friday, October 23, 2026

Kering reported a 1 percent organic revenue decline in the third quarter, primarily due to a 6 percent sales drop at its flagship Gucci brand, which underperformed expectations in key markets like China, Japan, and North America. The company is accelerating store closures and restructuring efforts but did not reaffirm its revenue growth guidance for the year, highlighting ongoing challenges from a softer macroeconomic environment and geopolitical tensions.

Kering's third-quarter revenue declined slightly, weighed down primarily by weaker sales at its flagship Gucci brand, the company reported Thursday. Group revenues reached €3.5 billion for the three months ending in September, representing a 1 percent organic decrease compared to the same period last year, broadly matching analysts’ forecasts.

Gucci, which remains Kering’s most significant brand by sales and profits, experienced a 6 percent sales drop during the quarter. This decline exceeded analysts’ expectations, who had anticipated a 2.8 percent reduction. The brand faced particularly soft demand in key markets including mainland China and Japan, as well as a slowdown in North America, contributing to the revenue shortfall. Other brands in the group, such as Saint Laurent and Bottega Veneta, saw sales increase by 2 percent in the quarter.

Kering’s chief executive, Luca de Meo, who joined the luxury group from Renault just over a year ago, reiterated that reviving Gucci’s performance remains a priority amid what he described as a “softer macroeconomic environment.” De Meo is actively restructuring the group, aiming to bring its independent brands into a more integrated operation and improve overall profitability. Alongside these changes, the company has expedited the closure of underperforming stores, shuttering 105 locations to date and planning an additional 20 closures before year-end, according to Chief Financial Officer Armelle Pouly.

Despite these efforts, Kering did not reaffirm its previous guidance for a return to revenue growth within the current year, reflecting the challenges it faces in the luxury sector. Pouly highlighted mainland China as the most significant hurdle, emphasizing the difficulty in that market, which is crucial for Gucci’s sales. The broader luxury industry has been affected by geopolitical tensions, notably the ongoing conflict in the Middle East, as well as persistent inflation that has dampened consumers’ purchasing power.

Investor confidence has been shaken not only by Kering’s results but also by similar softer-than-expected performance from other luxury giants such as LVMH and Hermès, signaling a more cautious outlook in the sector. Kering’s American Depositary Receipts fell 11 percent following the earnings update, underscoring market concerns about the group’s near-term growth prospects.

While Kering remains committed to improving its recurring operating margin in 2026, the latest quarterly results suggest the path to recovery may be slower than initially hoped, with external factors continuing to present significant headwinds for the luxury market globally.

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