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“We have demonstrated in the past that we know how to grow brands. And we will do it again. Gucci will come back. I have absolutely no doubts about this,” Kering chairman and CEO François-Henri Pinault said at the group’s annual earnings meeting.
On Tuesday morning, Kering posted a 12 per cent decline — including a 24 per cent drop at Gucci — in the fourth quarter of fiscal 2024. After rising at the open and falling, the Kering share price was up 1.3 per cent at closing. But at the conference, the executive appeared optimistic: “We are confident that we have reached an inflection point and that after a year of stabilisation in 2025, we will gradually resume a year of steady and increasingly profitable growth.”
The current trend in the first quarter of 2025 is in line with the Q4 performance, according to Kering’s top brass, who see no sign of rebound in China. “We don’t expect any improvement in China this year, neither deterioration I must say,” Pinault said, expecting “some kind of improvement probably starting next year”.
Pinault sees some positive signs in the US, echoing the comments of other industry leaders. “We need to remain cautious, and it’s true that we’re starting the year in the US much more optimistic than we started 2024,” Pinault said. “There’s a combination of things, which means that the US market should be significantly better this year than last.”
He also stressed the importance of the ongoing elevation strategy at each of the group’s houses, which is aiming to grow their customer base. “It s not a matter of leaving the entry-level segments we’re in and just moving upwards; it’s a matter of remaining very strong in the aspirational clientele segment that responds to the creative, fashionable side of our houses, and of adding to them the more sophisticated, more mature segments of the industry,” he said.
The next Gucci creative director will play a vital role in that strategy. Last week, Kering announced the exit of Sabato De Sarno, and his successor is to be announced “promptly, sooner rather than later”, according to Kering deputy CEO Francesca Bellettini.
Here are some of the key takeaways from the conference.
1. The strategy for Gucci
The next creative director of Gucci will be tasked to inject “desirability and fashionability”, Bellettini said at Tuesday’s conference. “The brand functions very well and shines when the tradition and the fashion components are 50-50 in terms of importance,” she explained.
“There’s work that has been done with Sabato and the whole team over the past 18 months to reconnect the brand with its heritage and improve the quality of the products,” she continued, citing the progress that has been made across the Jackie, B, Blondie and Bamboo bags. The brand will also launch “refreshed” versions of the Marmont and Ophidia handbags in April.
“We are not entering a new transition phase,” Pinault added. “This new appointment won’t slow down the recovery of the brand. We are moving according to our plans.”
2. Update on Kering’s other fashion brands
After growing very fast for a number of years, Saint Laurent has seen changing trends over the past five to six quarters (including in the fourth quarter, when sales were down 8 per cent), which Bellettini attributed to the reduction in traffic of aspirational customers. “Even though Saint Laurent’s image is very sophisticated, it has a very strong customer base in the aspirational segment,” Pinault noted. “We must be absolutely demanding on all products in all price segments, including the entry-level segments, where we must have the most attractive products that offer the best value for money. This is a concern for all the group’s brands, particularly Saint Laurent, which has launched major initiatives.”
The brand has a new CEO, Cédric Charbit, who has been in the role since 2 January. “ The experience of Cedric in both merchandising, retail management and dealing with strong creative directors is there. And I think that Anthony [Vaccarello] has already shown us over the years his ability to evolve and build on what he has been doing so far. So I have absolutely no doubt about the future success of Saint Laurent.”
‘Other Houses’, which includes Balenciaga and Alexander McQueen, reported sales down 4 per cent. At Balenciaga, CFO Armelle Poulou noted the “resounding success” of the recent handbag launches as well as a “sequential retail acceleration, mostly driven by Asia-Pacific”. Meanwhile, Alexander McQueen had a “challenging” year and final quarter. “The creative transition is ongoing, and newness is not offsetting the heavy pressure from carry-overs,” Poulou said. Alexander McQueen tapped Seán McGirr as creative director in December 2023.
Bottega Veneta is the bright spot, with sales accelerating to a 15 per cent increase in the fourth quarter of the fiscal year. On Louise Trotter, who took to the creative director role in late January, succeeding Matthieu Blazy who left for Chanel, Pinault said: “She’s perfectly in tune with the house’s codes, has an absolutely unheard-of understanding of the house — even before she started in the house — and has an aesthetic and cultural approach that’s extremely compatible. We’re expecting from this new collaboration, particularly in the ready-to-wear area that Bottega has yet to develop, very significant progress.”
3. US tariffs and French taxes
Asked by an analyst if Kering takes any preemptive measures for potential tariffs on luxury goods to come Stateside, Pinault replied: “We’ve been already operating in big markets where we have import duties, China for instance, so we know how to maneuver into that. We will have to review our pricing strategy to take into consideration the tariffs. One impact of a rise in tariff will also be the dynamism of US tourism in Europe. Not offsetting for sure the impact in America, but we know how to maneuver to that. I’m not that worried about it, but let’s see what happens.”
He dismissed moving production to the US. “ We are producing in Italy and in France, and this is part of the promise that we bring to the consumer through our product, through our heritage. So we have no plan of producing in the US to counter the tariff. It makes no sense,” he added.
Meanwhile, France’s budget has finally been approved and there should be only one year of incremental tax charge for French companies in 2025, which drew the ire of LVMH CEO Bernard Arnault, among other French executives. Arnault voiced deep dissatisfaction at LVMH’s earnings, which was interpreted by some as a threat to relocate LVMH to the US and ignited a controversy with head of the E.Leclerc supermarket chain Michel-Édouard Leclerc. “I never said we were going to relocate the LVMH group… What I said is that the tax measures that are being considered are an incentive to relocate,” Arnault clarified on the company’s X account.
While Pinault said the impact would be “limited” at Kering due to the company’s large Italian footprint, he added: “Having new tax on corporations is never a good sign for the competitiveness of our companies in France. Of course, we are aware of the fact that the public finances are deteriorating in this country. It’s a shared responsibility and a burden. The fact that we have to make an effort for a limited period of time, which is one year, could be understood; but we need to have a guarantee on that, because over a long period of time, it will be very detrimental to the economic growth of the country.”
4. Kering Beauté: Balenciaga to launch a high-end fragrance
Kering formed its beauty arm in early 2023. Kering Beauté’s revenue amounted to €323 million in 2024, with Creed accounting for the bulk of the sales (around €300 million). Pinault praised Kering Beauté (and Kering Eyewear) for boosting visibility. “They provide additional entry points for our brands, and they are steadily growing and profitable, giving the group more stability and resilience,” he explained.
Creed, acquired by Kering in late 2023, “had a very good year in 2024, notably in the US. It also gives us leverage and a platform to enter the haute parfumerie segment,” noted Jean-Marc Duplaix, Kering’s deputy CEO of operations and finance. “The priority of Kering Beauté is really fragrance,” Pinault added. After Bottega Veneta launched high-end perfumes last October, Balenciaga is set to do the same between July and September. “Our strategy is to position in high perfumery before entering the prestige segment within 18 months,” said Pinault.
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