Kering forecast a return to growth despite another quarter of declining revenue, as the luxury group continues working through brand performance imbalances under recently appointed chief executive Luca de Meo’s leadership.

Fourth quarter comparable sales slipped three percent to 3.9 billion euros, slightly outperforming analyst expectations even though the flagship Gucci label remained the company’s biggest drag on overall performance.

Gucci recorded a ten percent comparable decline during the period, while the rest of the portfolio, including Yves Saint Laurent, Bottega Veneta and Balenciaga, achieved flat or modest year on year improvements.

“2025 was not the year we wanted,” CEO Luca de Meo said on an earnings call. “It didn’t reflect the full potential of Kering, and we all know it.”

Full year revenue dropped ten percent to 14.7 billion euros as recurring operating income fell thirty three percent, compressing operating margin to 11.5 percent because weaker sales volumes pressured profitability.

Investors still welcomed signs of stabilisation, sending shares sharply higher despite the stock remaining down significantly for the year, while other luxury companies also benefited from improved sentiment.

Industry Pressures And Strategy Changes

Kering’s recent struggles reflect wider luxury market weakness following pandemic demand spikes that drove aggressive pricing, discouraging customers and coinciding with slowing spending in the key Chinese consumer market.

Management hopes creative changes will revive Gucci, appointing Demna as artistic director and launching his first collection, “La Famiglia,” to restore brand desirability and momentum.

The company also faces scrutiny over de Meo’s leadership after his unexpected arrival from the automotive sector, where he previously led a turnaround effort at Renault earlier in the decade.

Analysts now watch closely for consistent improvement across brands, with some suggesting the results may indicate the early stages of recovery if Gucci returns to expansion next year.

Kering expects “return to growth and margin improvement” in 2026 and plans to provide fuller strategic guidance during its April Capital Markets Day presentation to investors.

“Since the second half of the year, I can assure you, we have been taking action decisively to put the group back on the right trajectory,” De Meo said, adding that the group is still “far from” where they want to be.

One major initiative involved reducing debt by selling its beauty division to L’Oreal for four billion euros to sharpen focus on core fashion activities and strengthen financial flexibility.