Kering faces crossroads as Gucci’s identity crisis deepens

Following a disappointing quarter, Kering is under increasing pressure as its crown jewel, Gucci, struggles through a challenging transition. Industry analysts warn that the global luxury sector is entering a period of stagnation, and Gucci, once Kering’s fastest-growing brand, appears especially vulnerable.

Gucci’s 25 percent drop in Q1 sales marks a deepening decline, especially troubling given that the brand had already seen an 21 percent decrease during the same period last year.

According to insights shared with FashionUnited by Yanmei Tang, Analyst at Third Bridge, the global luxury market is not expected to rebound significantly until at least 2027. “The outlook for the global luxury industry in 2025 is likely to remain flat at best,” Tang said. “While a steep decline isn't anticipated, brands like Gucci—heavily reliant on aspirational shoppers—will feel the squeeze of continued middle-class pressure, especially in key regions like China and the US.”

Subdued outlook

Gucci’s financial performance in 2025 is forecast to remain subdued, with sales and profitability under strain. The brand is grappling with a sluggish product cycle, particularly in its leather goods category, once a core growth driver. Analysts note a “lack of standout products” that can reignite interest among consumers or bring them back into boutiques.

The appointment of Demna, Balenciaga’s boundary-pushing creative lead, as Artistic Director of Gucci has added a new layer of complexity, Tang notes. Known for his dystopian streetwear aesthetic, Demna’s vision marks a stark departure from the quieter, more eclectic legacy left by former creative directors Sabato De Sarno and Alessandro Michele.

While there is potential upside in ready-to-wear—where Demna’s streetwear fluency may connect with Gen Z and Millennial shoppers—the lack of a coherent brand narrative is increasingly seen as a liability. Gucci is struggling to find its footing amid leadership changes and shifting creative signals.

For Kering, which has already weathered slowing momentum at other key houses, the stakes are high. Investors and industry observers are watching closely to see whether Gucci can successfully balance bold innovation with brand consistency—or whether it risks becoming a case study in the dangers of disruptive reinvention without a unifying strategy.

Tang sums up the sentiment among experts: “Without a clear creative and commercial direction, Gucci risks continued erosion in both consumer confidence and financial performance.”