Kering, revenues down 16% and profit halved in the first half of the year

Yves Saint Laurent generated sales of EUR 1.3 billion in the half year (-11% reported, -10% comparable). Retail sales fell by 10% and the wholesale channel posted -17%. "New products, particularly in ready-to-wear and footwear, received a favourable reception," reports the group's note. The recurring operating margin stood at 20.4% (-1.6%).

Bottega Veneta was the only brand to perform against the trend. Revenues amounted to €846 million (+1% reported, +2% comparable). Retail sales grew by 3% and wholesale sales declined by 3%. The second quarter showed good resilience, especially in North America. The recurring operating margin increased to 15% (+0.5%).

The other maisons generated revenues of EUR 1.5 billion, down 15% on a reported basis and 14% on a comparable basis. Retail sales fell 11%, while wholesale contracted 23%. Balenciaga maintained resilient results in North America and Asia Pacific, whileMcQueen accelerated the rationalisation of its retail network.

The jewellery maisons held up, with a good performance by Qeelin and significant developments for Boucheron and Pomellato. However, the operating result was negative by EUR 29 million, mainly due to the effect of McQueen.

Kering Eyewear and corporate generated revenues of €1.1 billion (+2% published, +3% comparable). Kering Eyewear recorded €921 million in revenue, while Kering Beauté reached €150 million, driven by Creed's women's fragrances. Total recurring operating profit was EUR 126 million (+25%).

Second quarter 2025 revenues for the luxury group came in at €3.7bn, down 18% on a reported basis and 15% on a comparable basis. The exchange rate effect was a negative 3%, according to a Kering release.

Sales through the direct retail network decreased by 16% on a comparable basis, in line with the trend in Q1 2025. Trends improved in North America (-10%) and Asia-Pacific (-19%) compared to Q1, while Western Europe (-17%) and Japan (-29%) slowed, mainly due to the decline in tourism. Revenues from the Wholesale and Others channel declined by 12% on a comparable basis.

During the conference call with analysts, management pointed out that the group expects margins for the full year 2025 to be lower than in 2024, but less than they were in the first half of the year.

"In pursuit of its long-term vision," the statement goes on to say, "Kering continues to invest in the development of its maisons, to strengthen their desirability and distributive exclusivity, balancing creative innovation and heritage enhancement, and ensuring the highest standards of quality, sustainability and customer experience," reads the statement, which continues, "In a still uncertain economic and geopolitical environment, the Group continues with determination to execute its strategy for a profitable and sustainable long-term growth path. Initiatives are underway to accelerate the development of the maisons, accompanied by a rigorous control of operational and financial efficiency, through disciplined cost management, selective investments and sound balance sheet management"..

During the conference call with analysts, Kering group chief financial officer Armelle Poulou commented: 'As you know, Luca de Meo will join us as CEO in mid-September. Of course, it is still too early to outline new directions' strategic, 'but we have already started working with him so that he can hit the ground running from day one'.

As announced, Luca de Meo will take over as group CEO on 15 September. 'In the meantime,' the cfo added, 'we have continued to make progress on several fronts. We know that this comes at a difficult time for the global economy and for the industry, but we are already ready for the new chapter that will begin in the second half of the year'.

Also on De Meo's arrival, Deputy CEO Jean-Marc Duplaix. added: 'Luca has already met several stakeholders in the group, starting in France, and is preparing for his official arrival. We look forward to working with him. But of course it will be up to him to define his roadmap and to present his ambitions. When you have a new manager on board, there is a time to talk to the market,' and 'we think it will be in 2026, just to give him time, although we are working hard with him precisely to enable him to go quickly when he arrives,' Duplaix continued, explaining that 'there is no reason to believe that in 2026 we will not have some kind of appointment' in which 'to discuss the ambitions of the group, led by Luca'.

"In the second quarter, all the group's fashion houses - with the exception of Gucci - performed slightly below or in line with already negative expectations, according to the consensus gathered internally by the company. This hints at a potential turning point in the deteriorating trend in results," writes Bernstein's Luca Solca in a note, which continues, "Gucci lived up to expectations with a -25% year-on-year decline (in line with consensus), while Saint Laurent posted -10% (also in line), and Bottega Veneta disappointed with modest growth of +1% versus the expected +3%.

On the profitability front, Bernstein analysts point out: "Despite the weakness in the top line, operating profit was +4% above expectations, thanks to an operating margin of 12.8%, or +57 basis points above estimates. The positive surprise came mainly from Saint Laurent, which reported a first half margin of 20.4%, +212 basis points above consensus, albeit down -153 basis points year-on-year. In contrast, Gucci disappointed on the profitability front: the operating margin came in -66 bps below expectations, a significant drop of -865 bps year-on-year. This deterioration was attributable to operational deleveraging, partially offset by cost efficiency initiatives.

The note ends by noting: "The market's attention now remains focused on Gucci's relaunch plan and management transition. Current market valuations already incorporate expectations of significant improvement: Kering trades at 27 times expected earnings over the next 12 months, one of the highest multiples among covered companies, when compared to the average of the last ten years - a valuation only partly justified by earnings compression due to strong operating deleveraging".