Kering: Gucci retail slows again as resilience at other brands fails to offset profit forecast cuts

Sales met consensus. Why was the mix still disappointing?

Kering’s third-quarter 2026 revenue was 3.345 billion euros, flat year on year as reported and down 1% excluding currency effects. It matched the company-compiled market consensus and was better than JPMorgan’s forecast of a 3% decline, but year-on-year growth slowed from 2% in the second quarter.
The problem centered on Gucci retail, which fell 9% year on year excluding currency effects, worse than JPMorgan’s forecast of a 8% decline and consensus for a 6% decline. The drop also widened from 2% in the second quarter. By contrast, the smaller wholesale business grew 45%, masking retail weakness in Gucci’s overall sales performance.
The retail slowdown was affected by a tougher year-on-year comparison, a weak luxury environment and fewer new product launches during the quarter than in the second quarter. Gucci declined in every region: North America shifted from 9% growth in the second quarter to a 3% decline, while Asia remained down by double digits.

Management attributed Gucci’s weakness to footfall, while noting that new products improved conversion, average selling price per item and average transaction value. In other words, purchasing performance after customers enter stores has improved, but not enough to offset pressure on footfall.
The Primavera collection began being promoted at the end of August and entered stores in September, but trends across most regions in October remained close to those of the third quarter, while September was slightly better than the quarterly average. JPMorgan is therefore cautious about the strength of the sales uplift from new products; these recent trading comments refer to the group as a whole and cannot be directly attributed to Gucci.
The bank believes that, as more new products arrive and against a comparison base of a 10% year-on-year decline in Gucci retail in the fourth quarter of 2025, the brand should be able to partly escape the drag from the industry environment if the products work. Its focus is therefore on whether new products can translate improved purchasing metrics into a recovery in overall sales.

JPMorgan estimates that third-quarter sales at fashion and leather goods brands excluding Gucci were flat excluding currency effects, while retail grew 1%. Both were better than expected, and the brands were also more resilient than most peers. Saint Laurent was supported by demand in North America and Europe, new products and expansion among high-end clients; Bottega Veneta still posted high-single-digit growth against a high comparison base, driven mainly by leather goods.
Jewelry grew 11% excluding currency effects, with retail up 18%, above the bank’s forecast of 16%. Growth of 61% in Japan was the main driver. Balenciaga, however, remained weighed down by its creative transition and weakness in ready-to-wear and footwear, showing that the brands’ recoveries are not synchronized.

Management withdrew its full-year growth target but retained guidance for year-on-year margin expansion in 2026. However, because sales progressed more slowly, it no longer expects the second-half margin to exceed the first-half margin, weakening the pace of profit recovery.
The full-year net store closure plan increased from 100 to 125 stores, with 105 already closed; the total medium-term closure plan was unchanged. Without counting sales transferred to other stores, closures are expected to drag second-half group sales by 2%, above 1% in the first half, showing that reshaping the store network still carries a near-term revenue cost.
JPMorgan lowered its Gucci fourth-quarter retail growth forecast from a 5% decline to a 7% decline, and its 2027 forecast from 1% growth to a 2% decline. It cut group adjusted earnings per share forecasts for 2026 and 2027 by 6.5% and 4.7%, respectively, to 4.07 euros and 8.97 euros.
The bank maintained its “Underweight” rating and lowered its December 2028 price target from 215 euros to 200 euros. Based on its 2027 earnings forecast, Kering trades at about 24 times earnings, above the luxury sector average of 23 times excluding Ferragamo; its valuation remains at a sector premium as recovery expectations are revised down.