For the better part of two years, Kering SA has been the cautionary tale of the luxury sector — a once-dominant force humbled by missteps at its flagship Gucci brand, a revolving door of creative leadership, and a consumer environment in China that turned from tailwind to headwind almost overnight. But on Monday, shares of the French luxury conglomerate surged as much as 10%, their sharpest single-day gain in months, after fourth-quarter revenue came in ahead of analyst expectations and newly installed Chief Executive Officer Stefano Cantino laid out a strategic vision that gave investors something they had been sorely lacking: a credible roadmap for recovery.
The results, reported for the final quarter of fiscal year 2025, showed group revenue of approximately €4.4 billion, beating the consensus estimate compiled by analysts. While the top line still reflected year-over-year declines — a continuation of the painful trend that has defined Kering’s recent trajectory — the magnitude of the miss was narrower than feared, and management’s tone struck a markedly different chord from the defensive posture of prior earnings calls, as reported by CNBC.
A New CEO With a Merchant’s Eye and a Strategist’s Discipline
Stefano Cantino, who assumed the CEO role after a career that included senior positions at Louis Vuitton and a stint leading Gucci’s brand and communications strategy, used the earnings presentation to articulate what he called a “return to desirability” framework. According to CNBC, Cantino emphasized that Kering’s turnaround would not rely on aggressive discounting or volume-driven tactics — strategies that had diluted Gucci’s brand equity in prior cycles — but rather on a disciplined elevation of product, distribution, and client experience.
Cantino’s appointment had been closely watched by the investment community. Unlike his predecessor, who came from a more operationally focused background, Cantino brings deep expertise in brand storytelling and product strategy — skills that analysts say are precisely what Gucci needs at this juncture. His early moves have included tightening Gucci’s wholesale distribution, pulling back from off-price channels, and investing in what he described as “fewer, better” collections that emphasize craftsmanship and heritage over trend-chasing.
Gucci: Still the Linchpin, Still the Problem — But Signs of Stabilization Emerge
Gucci, which accounts for roughly half of Kering’s total revenue and an even larger share of group profit, remained the central focus of the earnings release. The brand’s fourth-quarter revenue declined, but the rate of decline decelerated meaningfully compared to the prior two quarters — a pattern that analysts at several major banks characterized as the early stages of a bottoming process. Comparable-store sales, while still negative, showed sequential improvement in every major region, including the critical Asia-Pacific market.
The stabilization at Gucci comes after a turbulent period that saw the departure of creative director Alessandro Michele in late 2022, the brief and commercially disappointing tenure of Sabato De Sarno, and a broader identity crisis that left the brand caught between its maximalist heritage and an ill-defined push toward quiet luxury. Cantino acknowledged on the call that Gucci’s creative direction had lacked consistency, and he signaled that the brand’s next creative chapter — details of which he declined to fully disclose — would be rooted in what he termed “authentic Gucci codes” rather than external fashion trends, according to CNBC.
Beyond Gucci: Bottega Veneta Shines, Saint Laurent Steadies
While Gucci dominated the headlines, Kering’s other houses delivered a mixed but generally encouraging performance. Bottega Veneta continued its remarkable run under creative director Matthieu Blazy’s successor, posting mid-single-digit organic growth in the quarter and reinforcing its position as one of the luxury sector’s most consistent performers. The brand’s emphasis on artisanal leather goods and understated elegance has resonated with high-net-worth consumers who have pulled back from more logo-heavy alternatives.
Saint Laurent, Kering’s second-largest brand, showed signs of steadying after several quarters of softness. Revenue was roughly flat on an organic basis, which analysts interpreted positively given the challenging comparisons and the broader pullback in aspirational luxury spending. Balenciaga, meanwhile, remained a work in progress, with management acknowledging that the brand’s repositioning following its controversies of 2022 was taking longer than initially anticipated.
The China Question: Cautious Optimism Amid Structural Uncertainty
No discussion of Kering’s prospects is complete without addressing China, which has been both the engine and the Achilles’ heel of luxury growth over the past decade. Cantino offered a nuanced assessment, noting that Chinese consumer confidence remained fragile but that Kering was seeing encouraging signals in terms of client recruitment and average transaction values among top-tier customers. He stressed that Kering’s China strategy would prioritize depth over breadth — deepening relationships with existing high-value clients rather than chasing volume through new store openings or aggressive marketing campaigns.
This approach mirrors a broader shift across the luxury industry, where companies including LVMH, Hermès, and Richemont have all signaled a more selective approach to the Chinese market. The days of building mega-stores in every second-tier Chinese city appear to be over, replaced by a focus on experiential retail, private client events, and curated digital engagement. Kering’s management indicated that Gucci’s store network in China would be rationalized, with underperforming locations closed and remaining stores upgraded to reflect the brand’s elevated positioning.
Cost Discipline and Margin Trajectory: The Other Half of the Equation
Beyond the top line, investors were encouraged by Kering’s progress on cost management. The company reported that operating expenses as a percentage of revenue had declined, reflecting both targeted headcount reductions at the corporate level and more efficient marketing spending across the portfolio. Cantino emphasized that cost discipline was not about austerity but about redirecting resources toward the highest-return activities — primarily product development, client-facing roles, and store renovations.
Operating margins, while still well below the levels achieved during Gucci’s 2017-2019 golden era, showed modest sequential improvement. Analysts at several investment banks noted that if the current trajectory holds, Kering could return to double-digit operating margin growth by late 2026 or early 2027 — a timeline that, while not aggressive, would represent a meaningful inflection from the margin compression that has characterized the past two years.
Investor Sentiment Shifts: From Pariah to Potential Turnaround Play
The market’s reaction to Monday’s results was telling. Kering’s stock had been one of the worst performers in the European luxury sector over the past 18 months, losing roughly 40% of its value from its 2023 peak. The 10% surge on earnings day, while dramatic, still leaves the stock trading at a significant discount to peers like LVMH and Hermès on virtually every valuation metric. But the shift in sentiment was palpable. Trading volume was more than double the 30-day average, and options activity suggested that institutional investors were beginning to build positions in anticipation of further improvement.
Several analysts upgraded their ratings or raised price targets following the results. The bull case rests on the premise that Gucci’s brand equity, while damaged, is far from destroyed — and that the combination of a credible new CEO, a more disciplined commercial strategy, and an eventual recovery in Chinese demand could drive a meaningful re-rating of the stock. The bear case, meanwhile, centers on execution risk: Kering has promised turnarounds before, and the luxury sector’s competitive dynamics have only intensified, with Hermès and LVMH continuing to capture a disproportionate share of high-end consumer spending.
What Comes Next: The Creative Appointment That Could Define the Era
Perhaps the most consequential decision still ahead is the appointment of Gucci’s next creative director — or the formalization of a new creative structure that may depart from the traditional single-designer model. Cantino hinted that an announcement was forthcoming but declined to provide a timeline, saying only that the decision would be made “with the care and deliberation it deserves.” Industry observers have speculated about a range of candidates, from established names to emerging talents, and the eventual choice will be scrutinized as a signal of whether Kering is truly committed to long-term brand building or will default to a safer, more commercially expedient path.
For now, the message from Kering’s new leadership is clear: the turnaround will be gradual, it will be grounded in product and brand fundamentals, and it will require patience from shareholders who have already endured a painful correction. Whether Cantino can deliver on that promise remains to be seen, but Monday’s results — and the market’s emphatic response — suggest that the era of reflexive pessimism around Kering may finally be drawing to a close.
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