Shares in Gucci-Parent Kering Plunge as Hoped-For Recovery Keeps Receding

By Joshua Kirby

Shares in French luxury-fashion group Kering dropped sharply after a continued slide in sales at its biggest brand Gucci raised further doubts over the prospects for the group's recovery.

Group sales fell 1% on year between July and September on a comparable basis to 3.345 billion euros ($3.75 billion), Kering said late Thursday. The total was dragged down by a 6% drop in sales at Gucci, a storied Italian fashion brand that makes up not far from half of group revenue. Gucci has struggled with falling sales in recent years, driven by cooling brand heat and a squeeze on the wallets of the more aspirational fashion customers key to the house's growth, especially in China.

"The recovery of Gucci remains our defining priority," Kering said.

Shares dropped more than 11% to 188.70 euros in opening trading in Paris. Year to date, Kering shares have lost some 37%.

The performance shows the company is "not where it wants to be," finance chief Armelle Poulou said in a call following the update. The Chinese market remains the group's single biggest challenge, Poulou said.

The backslide dampens sparks of recovery booked the previous quarter, when Kering spoke optimistically of a "marked acceleration" at Gucci that drove group sales 2% higher on year.

Challenges to demand in the luxury industry "had the better of the group's self-help momentum," analyst James Grzinic at Jefferies wrote.

The recovery at Gucci is gradually taking shape, Kering said Thursday. The company said it is looking to improve its profit margin this year through cost-saving measures, noting that short-term revenue trends reflect a challenging macroeconomic environment. Kering said it would "maintain strong investment in the desirability of its houses."

By focusing on shoring up its operating margins, Kering is prioritizing what it can control over what it can't, analysts at Bernstein wrote.

"Recent creative director changes may have left Kering with even less control over top-line momentum for the time being," the brokerage said. "Management's focus on the bottom line leaves us less confident in a speedy turnaround story."

In a bid to shake things, Kering last year appointed an industry outsider as group chief executive, bringing on Luca de Meo, a former boss of car maker Renault. Under De Meo, the group has seen a raft of changes in business and creative leadership, including a new CEO for Gucci, which had earlier the same year gambled on a new artistic director in the shape of Demna Gvasalia, previously creative chief at stablemate Balenciaga for a decade. This month, Kering announced the departure of creative directors at two of its houses, Saint Laurent and the smaller Alexander McQueen.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

October 23, 2026 04:18 ET (08:18 GMT)