The luxury fashion world was recently hit with a surprising development. French luxury conglomerate Kering reported a 12% drop in sales for Q4 2024, bringing total revenue to €4.39 billion. The most significant contributing factor was Gucci’s sharp decline, as the brand faced a staggering 24% drop in quarterly revenue and a 23% decline for the year. This downturn led to Kering parting ways with creative director Sabato De Sarno in an effort to reposition the iconic brand.
While Gucci struggled, other Kering brands had mixed results. Yves Saint Laurent faced challenges, but Bottega Veneta emerged as a rare success story, standing out as the only Kering brand to report growth for the year. Now, the question remains: Can Kering turn things around in 2025?
Gucci has long been Kering’s most valuable asset, contributing nearly half of the company’s revenue and two-thirds of its recurring operating profit. However, 2024 was a challenging year, with sales at Gucci’s own retail stores dropping by 21% and wholesale revenue falling 28%. Gucci ended the year with total revenue of €7.7 billion, raising concerns among investors and luxury consumers.
Despite some signs of recovery in key markets like China and the U.S., the brand struggled globally. Attempts to reposition Gucci and revive its appeal have not yet delivered the expected results. In response, Kering leadership is now focused on improving Gucci’s product strategy, distribution, and customer engagement.
Yves Saint Laurent also faced setbacks, with a 9% decline in annual revenue and an 8% drop in Q4 sales. The brand fared better in North America and the Asia-Pacific region, particularly in leather goods and handbags, but weak wholesale sales remained a challenge. Yves Saint Laurent still maintained an operating income of €593 million and an operating margin of 20.6%, signaling that while the brand had difficulties, they were not catastrophic.
On the other hand, Bottega Veneta proved to be the strongest performer among Kering’s major brands. The label saw a 4% increase in annual revenue and an impressive 12% surge in Q4 sales. Its retail store segment performed particularly well, posting a 10% increase, with strong consumer demand in North America and Western Europe. Bottega Veneta’s success translated into a €255 million recurring operating income, with an operating margin of 14.9%, demonstrating the advantages of a well-executed luxury retail strategy.
Beyond these core brands, Kering’s other fashion houses delivered a mixed performance. Balenciaga saw strong demand for leather goods, while Alexander McQueen struggled due to an ongoing transition. Brioni achieved double-digit growth, and Kering’s jewelry brands, including Boucheron, performed well. However, revenue from Kering’s “Other Houses” division declined by 8%, resulting in a €9 million operating loss.
Despite Gucci’s difficulties, Kering CEO François-Henri Pinault remains optimistic. He believes that the company has reached a point of stabilization and that growth will return. To drive a turnaround, Kering is focusing on reinforcing brand desirability, revising product strategy, optimizing distribution networks, and making strategic hires to lead a refreshed vision.
Industry experts agree that Kering must act quickly, given Gucci’s critical role in the company’s financial health. Strengthening momentum at Yves Saint Laurent and capitalizing on Bottega Veneta’s success will also be essential. With rising competition from luxury powerhouses such as Hermès, Chanel, and LVMH, Kering will need a thoughtful and aggressive approach to regain lost ground.
The luxury industry is undergoing a shift, and Kering finds itself at a crucial juncture. Gucci’s struggles are a major concern, but Bottega Veneta’s growth signals that luxury consumers still appreciate exclusivity and refined aesthetics. As 2025 approaches, all eyes will be on how Kering adapts to shifting market expectations. A successful turnaround strategy will be essential in maintaining Kering’s position in the high-end fashion world.