Kering's stock fell 6% in morning trading in Paris after the luxury conglomerate reported first-quarter revenue of 3.57 billion euros ($4.21 billion), marking a 6% year-on-year decline on a reported basis and flat performance at constant exchange rates [1]. The company's flagship brand, Gucci, saw organic sales drop by 8%, a steeper fall than the 6% decline anticipated by sell-side consensus, highlighting ongoing challenges despite efforts by new CEO Luca de Meo to revitalize the brand [1].
Retail revenue in the Middle East declined by 11% in the first quarter, reversing earlier growth in the region, which accounts for about 5% of Kering's retail revenue and includes 79 stores [1]. The company attributed part of its earnings pressure to the ongoing war in Iran, which has weighed on luxury demand in the Middle East [1].
Investors are now focused on Kering's upcoming Capital Markets Day, where CEO Luca de Meo is set to present the company's strategic roadmap, dubbed 'ReconKering.' De Meo emphasized that 'Gucci remains our top priority. A comprehensive turnaround is underway, with decisive actions across client, distribution and, above all, the offer' [1]. Bernstein analyst Luca Solca described the results as a 'reality check,' noting that market optimism for a revival often outpaces management's ability to deliver tangible results [1].
Despite recent underperformance, Kering's stock has outperformed most peers over the past year, rising about 10% since de Meo took over as CEO on September 15, 2025. In February, shares surged by double digits following the company's fourth-quarter results and a strategic update from de Meo [1]. The company, along with other luxury peers, continues to face headwinds from weak demand in China and the lingering effects of post-pandemic price hikes that have alienated some customers [1].
CONCLUSION
Kering's disappointing first-quarter results, driven by a sharper-than-expected decline in Gucci sales and Middle East market weakness, triggered a significant stock drop. Investors are now looking to CEO Luca de Meo's upcoming strategic presentation for signs of a credible turnaround. The market remains cautious, with analysts highlighting the gap between optimism and actual progress.