Kering ADRs surged 8% after the Gucci parent showed signs of recovery at the end of last year and said it targets a return to growth in 2026, as the group aims to turn the page after years of falling sales.
The Paris-based luxury company is pushing to turn around the fortunes of its mainstay Gucci brand under a comeback plan designed by newly installed Chief Executive Luca de Meo. Like its sector rivals, Kering has had to contend over the last few years with a broad-based downturn in spending on high-end consumer goods that put paid to a post-pandemic luxury shopping boom.
Kering made sales of 3.905 billion euros ($4.65 billion) in last year's final quarter, it said in an earnings update Tuesday. While the result represented a decrease of 9% from the same period of 2024, it marked an improvement from the previous quarter, when the group logged a 10% sales decline on year. On a comparable basis, sales fell 3% on year in the fourth quarter.
Gucci posted fourth-quarter sales of 1.62 billion euros, down 16% on year and broadly in line with analysts' estimates of 1.61 billion euros, according to FactSet data. In the previous three months, the label's sales fell 18%.
For this year, Kering, whose stable of brands also includes the likes of Yves Saint Laurent, Balenciaga and Bottega Veneta, expects to return to growth and improve margins. The company has reported annual sales declines for the last three years in a row.
Shares in Kering rose as much as 14% in European morning trade Tuesday, which if maintained until close would mark the stock's biggest one-day percentage gain since October 2008. Shares are down nearly 40% since the start of 2023.
Industry peers also traded higher, including luxury bellwether LVMH, which houses Louis Vuitton and Dior among other brands, and Birkin-bag maker Hermes. Italy's Salvatore Ferragamo and Brunello Cucinelli jumped 3.3% and 2.4%, respectively. Shares in Burberry, Swatch and Cartier-owner Richemont were up more than 1.5%.
"Kering is just at the start of a multiyear turnaround," analysts at Deutsche Bank wrote in a research note. The improving trend over the second half should be enough to remind investors of the direction of travel, the analysts said.
At its capital markets day scheduled for April 16, the company is expected to add details on its turnaround plan, it said.
"The performance in 2025 does not reflect the group's true potential," de Meo said. "We have to raise our own bar," the CEO told investors in a call Tuesday.
After a period of slowing demand for high-end goods, the luxury industry is hopeful that a rebound among Chinese consumers, as well as renewed creative teams, can help claw back some ground.
Kering has struggled more than some peers. Gucci, its main revenue source, has tended to rely on seasonal, transient designs that appeal to a less wealthy shoppers who are more likely to refrain from splashing out in a tough economy. That stands in contrast to the better performance at brands such as Hermes or Cucinelli with a focus on a classic look that appeals to consumers with a more deeply ingrained purchasing power.
In the coming weeks, Kering said it plans to announce appointments to new positions. "We need to structure the organization in a different way," de Meo said.
Market conditions remain challenging amid geopolitical turmoil that has clouded demand for high-end goods. Creaking consumer confidence in the U.S., a vital market for luxury, is an added headwind to the sector's struggling recovery.
Still, de Meo said he remains confident, noting Gucci's ability to rebound from previous travails.
"We are seeing a lot of positive signs," he said. "Including at Gucci."
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