^{Source: Jing Daily}

Kering's First-Quarter Sales Decline Sharply

Kering, the French luxury goods powerhouse, reported a significant 14% year-over-year drop in first-quarter 2025 revenues, totaling €3.9 billion ($4.4 billion). This figure fell short of the €4.01 billion anticipated by analysts, reflecting broader challenges in the luxury sector. ​

Gucci's Performance Raises Alarms

Gucci, Kering's flagship brand accounting for nearly half of the group's revenue, experienced a steep 25% decline in comparable sales, bringing in €1.57 billion. This downturn underscores the brand's ongoing struggles to resonate with consumers amid shifting fashion trends and economic uncertainties. ​

Regional Sales Reflect Global Challenges

The sales slump was evident across key markets:​

• Asia-Pacific: Sales dropped by 25%, influenced by reduced consumer spending and economic headwinds.​
• North America & Western Europe: Both regions saw a 13% decline, highlighting widespread challenges in the luxury retail landscape. ​

Strategic Leadership Changes at Gucci

In response to Gucci's declining performance, Kering appointed Demna Gvasalia, formerly of Balenciaga, as the new creative director. His vision is expected to steer the brand towards a refreshed aesthetic, with initial designs anticipated by September. However, the transition follows the departure of Sabato De Sarno and comes amid investor concerns over past controversies linked to Gvasalia's tenure at Balenciaga. ​‍

Operational Adjustments and Store Closures

To mitigate financial pressures, Kering has closed 25 stores this year, including a luxury salon in Los Angeles, and plans further closures. These measures aim to streamline operations and reduce costs without compromising brand presence.

Market Reaction and Investor Sentiment

Following the earnings report, Kering's shares fell by over 4%, contributing to a 45% decline in stock value over the past year. Analysts express caution, suggesting that a successful turnaround for Gucci may require at least a year, given the current market dynamics and internal restructuring efforts. ​

Outlook Amid Luxury Sector Challenges

The broader luxury market faces headwinds, including inflationary pressures and changing consumer behaviors. While brands like Bottega Veneta and Kering’s eyewear and beauty divisions showed modest growth of 4% and 3%, respectively, the overall outlook remains cautious. Kering's focus on strategic realignment and brand revitalization will be critical in navigating the evolving luxury landscape.

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