Luxury: Profits of French company Kering, the world's number 3 in the sector, plummet by 46%

After a 22% drop for LVMH a few days ago, it was Kering's turn to announce this Tuesday, July 29, a 46% drop in net profit for the first half of 2025, to €474 million. François-Henri Pinault's luxury group, the world's number 3 in the sector, is being weighed down by a drop in sales and the difficulties of its flagship brand Gucci, which represents nearly half of its sales.

Over the first six months of 2025, revenue at Kering, which also owns Yves Saint Laurent, Bottega Veneta, and Balenciaga, fell 16% to €7.6 billion. In a statement, CEO François-Henri Pinault said that "the published results are still well below our potential." But the CEO also said he was convinced "that the efforts made over the past two years have laid solid foundations."

The group continues to face "an economic and geopolitical environment that remains uncertain," the press release acknowledges. Its profitability continued to decline in the first half: the current operating margin fell to 12.8%, compared to 17.5% a year earlier. Kering's main problem is that it is failing to turn around Gucci, its flagship Italian brand, which alone accounts for two-thirds of its operating profitability. In the second quarter, Gucci saw its sales fall by 27% to €1.46 billion.

The group's other brands are not faring any better. Yves Saint Laurent's revenue fell 11% to €1.29 billion. The revenue of the other "houses," including Balenciaga, fell 15% to €1.46 billion.

Kering is pinning its hopes on the arrival of its new CEO, former Renault executive Luca De Meo, in mid-September. At that time, François-Henri Pinault, son of the group's founder, will step back from day-to-day management, although he will remain chairman of the board. During the results presentation, Kering's chief financial officer, Armelle Poulou, indicated that the company had already begun working with Luca De Meo on future directions.

Regarding the delicate macroeconomic context, the tariff agreement reached between the European Union and the United States on Sunday does not seem to be overly worrying Kering's management. The 15% surcharge imposed by Donald Trump is deemed "totally manageable" by Armelle Poulou, who opens the door to a new price increase in the fall. At the same time, Gucci's new creative director, Demna Gvasalia, will present the brand's new collection. It's an understatement to say the pressure on his shoulders is considerable.

The luxury sector, whose three French champions are LVMH, Hermès, and Kering, is experiencing a difficult period globally. Triumphant after the Covid years, this market, worth €363 billion, declined for the first time in fifteen years (excluding the Covid period) in 2024.