Paris (France) (AFP) – French luxury group Kering reported Tuesday a steep fall in net profit but forecast a return to growth as sales declines were stanched at Gucci and other key brands. The group, which embarked on a deep restructuring effort with the hiring of CEO Luca de Meo last year, also posted lower debt and announced an exceptional dividend payout.
Investors cheered the earnings report, with Kering shares soaring 11 percent to 288 euros in morning deals on the Paris stock exchange. “The group’s 2025 performance does not reflect its true potential,” de Meo, who was poached from Renault, said in a statement. Kering has struggled to turn things around at Gucci, its flagship Italian fashion house famous for its handbags, and in March it wooed the Georgian designer Demna to take over as artistic director.
Overall sales dropped by 13 percent to 14.7 billion euros ($17.5 billion) last year while net profit plunged by 93.6 percent, Kering said, reflecting the steep losses at Gucci and Yves Saint Laurent, by far its biggest brands. But the sales performance improved in the fourth quarter, when like-for-like revenue at Gucci fell 10 percent to 1.6 billion euros — compared with quarterly declines of around 25 percent for much of last year.
Total sales in the fourth quarter “were 3.9 billion euros, or two percent above the consensus estimate, with outperformances at all brands and divisions,” said analysts at RBC Capital Markets. On top of a three euro per share dividend payout from the 2025 earnings, Kering also announced an exceptional one euro per share payout from the proceeds of the sale of its Beauty division to L’Oreal.
The sale was one of several moves to cut a debt pile that stood at eight billion euros at the end of last year, a reduction of 2.5 billion euros from a year earlier. “On April 16, at our Capital Markets Day, we will present a clear roadmap to…revive growth, with precisely defined brand strategies, a more efficient organisation and rigorous financial discipline,” de Meo said in the statement.
© 2024 AFP
