Kering’s less-than-promising Q1 results recently sent waves of disappointment through the luxury industry as the French conglomerate reported revenues plunging 14% year over year.
The results put a particular focus on already troubled brand Gucci, which experienced a sharp 25% drop in sales, underscoring the brand’s ongoing struggles to resonate with consumers. Meanwhile, brands like YSL also saw a 9% decrease in sales. Kering attributed much of its ongoing troubles to weak overall performance in China and North America among other regions.
“Analysts were already worried about luxury in 2025, and given the macroeconomic environment and global uncertainty, I am expecting weak sales throughout the year,” Wendy Zajack, adjunct faculty at Georgetown University’s McDonough School of Business, who specializes in luxury goods and marketing, told Retail Brew in an email.
While Kering may have anticipated the results, it has tried to make some unexpected moves to respond to challenges, namely its appointment of Demna as the creative director at Gucci. But will the decision—likely aimed at revitalizing the flailing brand’s appeal, especially among younger consumers—work in its favor in the long run? Most analysts remain cautiously optimistic.
“The challenge is: Can he breathe excitement and creativity into the brand that can appeal to both brand loyalists and new customers?’” Zajack said. “It will take some time to start to see traction…but if he does some of what Tom Ford’s strong vision at Gucci in the ’90s did or even Alessandro Michele driving a mix of historic, edgy, and inclusive, it could work.”
Darpan Seth, CEO of Nextuple, an omnichannel order management advisory and technology firm, agreed, adding that “creative transitions take time” and will ultimately depend on a number of factors.
“Demna’s appointment could help reposition the brand creatively, but equally important is improving SKU discipline, sharpening inventory control, and delivering a truly omnichannel experience,” he told Retail Brew via email. “That’s what it’ll take to rebuild their consumer following. All of this will take some time and, therefore, added short-term pressure.”
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But while Gucci’s future hangs in the balance, there were also some bright spots in Kering’s portfolio, primarily Italian retailer Bottega Veneta, which saw a 4% bump in sales. Zajack believes its success comes from a “back to the basics of luxury strategy” that focuses on a mix of “high-quality materials, craftsmanship, attention to detail, and classic design.”
“Kering and its other brands can also take a look at if they have been truly delivering high quality and superior customer service to their customers,” she said. “Luxury brands also need to decide how much to lean into shifting consumer trends and how to balance heritage and tradition. It is not an easy proposition.”
Brian Ehrig, partner in the consumer practice of Kearney, said Bottega Veneta had done relatively well because of products that resonated with customers. “They aren’t the only ones; we see this with Hermès as well, and several other brands,” he said. “Having good products is always a winning strategy.”
Ultimately, Kering’s woes are not limited to the conglomerate alone and are emblematic of the larger challenges plaguing the luxury industry as a result of inflation, rising costs and, more recently, tariffs.
Still, Bottega Veneta and Hermès’s success should offer a ray of hope.
“This quarter should be a signal,” Seth said. “The next phase of luxury will belong to brands that combine their creative edge with operational sophistication. The magic is still essential, but how it’s delivered will increasingly define who leads and who lags.”