Gucci’s new creative director Demna is expected to deliver the first “hint” of his vision for the ailing Italian megabrand this September, Kering executive Francesca Bellettini said Wednesday night.
Speaking to analysts after the French luxury group missed low expectations and reported a 14 percent drop in first-quarter revenues to 3.88 billion euros, she also made clear that the Georgian designer, who is moving over from sister brand Balenciaga in early July, will not pursue a scorched-earth policy on existing product lines, despite his past penchant for dystopian aesthetics.
“Demna is going to build on the vision of the brand. He’s going to bring desirability and fashionability, but it’s a build-up, not a cancelation,” said Bellettini, deputy chief executive officer in charge of brand development.
Bellettini and Armelle Poulou, Kering’s chief financial officer, were pummeled with questions about Gucci’s near-term prospects, given that its first-quarter sales dropped 25 percent on a comparable basis, slightly worse than the last three months of the year. (The brand accounted for 63 percent of Kering’s operating profit in 2024.)
While acknowledging that carryover styles were a heavy drag on Gucci’s performance in the quarter, Bellettini touted that its new Emblem, B Bag and Softbit handbag lines were performing in a low-traffic environment “giving us a lot of confidence in the appeal of novelties.”
Francesca Bellettini
She said Ophidia and Marmont lines would similarly be tweaked and improved in the near future, and “we are pushing even more on our supply chain to decrease the time to market for novelties. This is going to be the focus.”
In the future, “Demna for sure will be reinterpreting the icons,” Bellettini assured.
Since the designer was announced last month as the successor to Italian designer Sabato De Sarno, analysts had been fretting about the timing of Demna’s first Gucci collection, given that he is only finishing up his Balenciaga tenure in July with a couture collection.
De Sarno exited Gucci last February after a two-year collaboration that failed to ignite sales. His collections were met with mixed reviews and his timeless take on signature pieces did not gain enough traction at retail for a turnaround.
Bellettini skirted a direct question about who would succeed Demna as artistic director at Balenciaga, saying only that it would be announced “in due course,” and that she is searching for a “high caliber” candidate who “can build on what has already been done very well at the brand and continue the success and continue to develop.”
According to market sources, Balenciaga has held discussions with designers including Alaïa’s buzzy creative director Pieter Mulier and two free agents: Riccardo Tisci, who left Burberry in 2022, and Kim Jones, who recently wound up eventful stints designing Dior menswear and Fendi’s women’s collections.
It is understood Balenciaga’s business is evenly split between men’s and women’s, a rarity among Europe’s large luxury players.
Analysts expressed disappointment by the sales miss of 2 to 3 percentage points.
“We are likely to see further caution applied to Kering’s full-year 2025 earnings estimates given company-specific issues compounded by a challenging luxury sector backdrop,” RBC analyst Piral Dadhania said in a research note.
“This confirms our understanding that the Gucci revival has yet to appear and will likely face a more difficult context as luxury consumer demand softens,” opined Bernstein’s Luca Solca.
Citing an “environment harsher than anyone anticipated,” Poulou said Kering is anticipating another double-digit revenue decline in the second quarter, though the second half of the year should be better than the first.
The numbers trailed the performance of Kering’s larger luxury rivals LVMH Moët Hennessy Louis Vuitton, which reported a 3 percent dip in first-quarter revenues to 20.31 billion euros, and Hermès International, which bucked the trend and delivered a 7.2 percent improvement to 4.13 billion euros.
Kering reported double-digit declines across all regions in the first quarter of the year, with Asia-Pacific down 25 percent, in line with the last three months of 2024, the company noted.
However, Western Europe and North America fell 13 percent, and Japan 11 percent, representing a sequential deceleration.
First-quarter sales at Bottega Veneta improved 4 percent, reflecting gains “across all product categories,” and Kering Eyewear logged a 3 percent increase at comparable exchange rates. Meanwhile, Saint Laurent sank 9 percent and “other houses,” which includes Balenciaga, McQueen, Pomellato and Brioni, declined 11 percent.
While “the performance of Balenciaga’s leather goods was very solid,” sales were down at McQueen, still finding its footing under designer Seán McGirr, Kering said.
Bellettini noted that despite the low-traffic environment, all brands are improving on average ticket price. However, to fuel first-time purchases, brands are also revamping key leather goods lines for more “aspirational customers,” such as Saint Laurent’s Loulou range, she added.
The group closed a total of 25 stores in the quarter — including 10 at Gucci and a “substantial streamlining” at McQueen — leaving it with a network of 1,788 locations. Retail accounts for 73 percent of group revenues, and these were down 16 percent in the period. Wholesale decreased 9 percent.
Backstage at Alexander McQueen fall 2025 during Paris Fashion Week.
“As we had anticipated, Kering faced a difficult start to the year,” François-Henri Pinault, Kering chairman and chief executive officer, said in a statement issued Wednesday after the close of trading on the Paris bourse.
“In this environment, we are fully focused on executing on our action plans to reach our strategic and financial objectives and strengthen the positioning of our houses on all our markets,” Pinault said. “We are increasing our vigilance to weather the macroeconomic headwinds our industry faces, and I am convinced that we will come out stronger from the present situation.”
Poulou told the call she saw no change in sales trends so far in the second quarter.
“The U.S. in [first quarter] was similar to [the fourth quarter]. We don’t see any change in trends, but of course we remain vigilant,” she said. “We remain extremely cautious.”
Asked if Kering would pursue price increases to mitigate the impact of Trump administration tariffs, she said “we need more clarity” before acting and “we must consider consumer confidence in geo-pricing.
“Top-line recovery is our absolute priority,” she stressed.
A model wearing Gucci’s pre-fall 2025 collection and the Softbit bag.
