Following LVMH, another European luxury giant reported disappointing performance in the second quarter of this year. Kering Group's sales and profits both saw double-digit declines in the second quarter, with the drop exceeding Wall Street's expectations. The core brand Gucci continued to experience a sales decline of over 20%, reflecting the ongoing weakness in demand for high-end luxury goods.
Kering's Chairman and CEO François-Henri Pinault stated in the financial report that the current &#34;market environment is exceptionally challenging,&#34; and the group continues to streamline its distribution and cost base. He acknowledged that the performance was disappointing but pointed out that the group is working hard to turn the situation around. &#34;The data we report is still far below our potential, but we are confident that the comprehensive efforts over the past two years have laid a solid foundation for the next stage of Kering's development.&#34;
In its performance outlook, Kering stated: &#34;In an uncertain economic and geopolitical environment, Kering will continue to deploy its strategy to achieve a long-term growth trajectory in profitability.&#34;
Like LVMH, Kering also mentioned the impact of recent trade agreements between Europe and the United States on tariffs faced by EU export products. Kering's Chief Financial Officer (CFO) Armelle Poulou stated that the agreed 15% tariff rate met expectations and that Kering &#34;can manage it through price adjustments.&#34;
During the earnings call, Poulou mentioned that Kering had implemented some price increases in the second quarter and anticipated further price hikes this fall. She stated:
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&#34;We may consider a second wave of price increases in the fall. (But) we will ensure that it is implemented wisely, fully considering consumer sentiment.&#34;
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After the earnings report was released, Kering's U.S. stock, which had initially dropped 2.6% in early trading, turned positive, reaching a daily high with a 3.8% increase at midday, before giving back most of the gains and closing up over 0.2%. After a decline on Monday, it rebounded without continuing to fall away from the closing high reached last Friday, which was the highest in over four months.
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On July 29, Tuesday local time, Kering Group, headquartered in France, announced its financial data for the second quarter and the first half of this year.
1) Key Financial Data
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Revenue: The operating revenue for the first half of the year was €7.6 billion, a year-on-year decrease of 16%, down from a 11% decline a year ago. In the second quarter, revenue was €3.7 billion, a year-on-year decrease of 18%, while analysts expected €3.77 billion, with a 14% decline in the first quarter.
Operating Profit: The recurring operating profit for the first half of the year was €969 million, a year-on-year decrease of 38.7%, while analysts expected €934.9 million, down 42% from a year ago; the recurring operating profit margin for the first half was 12.8%, a decrease of 4.7 percentage points from a year ago.
Net Profit: The net profit for the first half of the year was €474 million, a year-on-year decrease of 46%, down 51% from a year ago
2) Revenue by Segment
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Gucci: Revenue for the first half of the year was €3.027 billion, a year-on-year decrease of 26%, compared to a 20% decrease a year ago. In the second quarter, revenue was €1.456 billion, a year-on-year decrease of 27%, while the first quarter saw a 24% decrease year-on-year.
Yves Saint Laurent: Revenue for the first half of the year was €1.3 billion, a year-on-year decrease of 11%, compared to a 9% decrease a year ago. In the second quarter, revenue was €609 million, a year-on-year decrease of 13%.
Bottega Veneta: Revenue for the first half of the year was €846 million, a year-on-year increase of 1%, compared to a 3% increase a year ago. In the second quarter, revenue was €441 million, a year-on-year decrease of 1%.
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<h2>In the second quarter, Kering's same-store sales accelerated to a decline of 15%, Gucci's decline remained the same as the first quarter</h2>
The financial report shows that Kering's revenue in the second quarter decreased by 16%, exceeding the 14% decline in the first quarter, and the revenue was below analysts' expectations. Thus, Kering has underperformed expectations for four consecutive quarters.
In the second quarter, Kering's same-store sales decreased by 15%, also exceeding analysts' expectations of a 14.7% decline and the 14% decline in the first quarter. Kering stated that there was a 3% negative impact from exchange rates in the second quarter's revenue.
By brand, Gucci, which contributed nearly 40% of Kering's revenue in the second quarter, saw same-store sales decline by 25%, remaining the same as the first quarter and slightly below analysts' expectations of a 25.1% decline.
Kering stated that Gucci's direct retail network sales in the second quarter decreased by 23% year-on-year, with a slight improvement compared to the previous quarter, mainly driven by performance in North America and the Asia-Pacific region. Although sales still declined year-on-year, the new leather goods collection was very successful. Notably, the Giglio handbag from Gucci's 2026 early spring resort collection has become one of the brand's most successful new products.
Kering's second-largest brand, Yves Saint Laurent, saw same-store sales decline by 10% in the second quarter, exceeding the 9% decline in the first quarter. Bottega Veneta's sales slowed in the second quarter, with same-store sales growing by 1%, compared to a 4% increase in the first quarter.
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<h2>In the second quarter, same-store sales in North America and the Asia-Pacific region, including China, slowed down, while the decline in Japan accelerated to 29%</h2>
Kering stated that same-store sales in its direct retail network decreased by 16% in the second quarter, remaining the same as the first quarter.
By market, overall, Kering's retail sales in all major markets saw double-digit declines in the second quarter, with the Asia-Pacific region, including Japan and China, experiencing the largest declines.
In the second quarter, Kering's sales in North America and the Asia-Pacific region, excluding Japan, slowed down. Same-store sales in North America and the Asia-Pacific region decreased by 10% and 19%, respectively, compared to declines of 13% and 25% in the first quarter.
Meanwhile, Kering's same-store sales in Western Europe and Japan accelerated their decline, decreasing by 17% and 29% in the second quarter, exceeding the respective declines of 13% and 11% in the first quarter
Kering stated that the significant decline in sales in Western Europe and Japan is mainly due to the decrease in consumer spending from tourists brought by the local tourism industry.
Wall Street Watch also mentioned last week that LVMH's organic revenue in Japan fell by 28% in the second quarter due to a base effect, as last year's depreciation of the yen stimulated foreign tourists' consumption in Japan.
Third Bridge analyst Yanmei Tang commented that Kering is facing a severe situation, as sales in its two major luxury markets—China and the United States—are under pressure.
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PPRUY

Kering's revenue has fallen short of expectations for four consecutive quarters, with same-store sales in the second quarter accelerating a decline of 15% compared to the first quarter. The top brand Gucci saw same-store sales drop by 25%, with the decline remaining consistent with the first quarter. In the second quarter, same-store sales in North America and the Asia-Pacific region, including China, slowed to declines of 10% and 19%, respectively, while same-store sales in Japan accelerated to a decline of 29%, attributed to local tourism consumption not meeting last year's levels. The CFO stated that the 15% tariff agreement with Europe and the United States is in line with expectations, and Kering can manage through price adjustments, having already implemented some price increases in the second quarter, with a potential second wave of increases considered for this fall. After the earnings report, Kering's U.S. stock, which had fallen over 2% in early trading, turned positive

- Kering Group reported a significant decline in sales and profits for Q2, with Gucci experiencing over a 20% drop, indicating ongoing weakness in luxury goods demand.  
- CEO François-Henri Pinault acknowledged the challenging market environment and emphasized efforts to streamline operations while expressing confidence in future growth potential.  
- The company plans to implement price adjustments in response to tariffs from recent trade agreements, with Q2 revenue falling short of analyst expectations, marking four consecutive quarters of underperformance.

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Kering's second-quarter revenue unexpectedly declined, Gucci sales fell by another 25%, and prices may rise again this fall due to tariff impacts | Financial Report Insights