Kering reported a smaller-than-expected decline in fourth-quarter sales, offering early signs of stabilisation under new CEO Luca de Meo, even as the luxury group cautioned that recovery remains fragile. Group revenue fell 3% year-on-year to 3.9 billion euros, beating forecasts for a steeper drop, helped by improving trends toward the end of the year. De Meo, who took charge after leading Renault, said momentum was “early, fragile, but real,” as he works to rebuild margins and confidence in the Gucci owner.

Gucci, which generates the bulk of Kering’s profits, posted a 10% revenue decline in the quarter—its 10th consecutive fall—but still outperformed expectations. Management said newly launched products and stronger handbag sales supported results, with some improvement seen across most regions. Despite these signs, profitability remains under pressure, with group operating margins sliding to 11% and Gucci’s to 16%, far below levels seen three years ago and trailing rivals such as LVMH.

The results underline the scale of the turnaround facing de Meo, as Kering grapples with high debt, restructuring costs, and years of weakening demand following shifts in fashion trends. The company has closed dozens of stores, cut operating costs, and sold its beauty business to shore up the balance sheet, bringing net debt to about 8 billion euros. While investors have welcomed balance-sheet repairs, analysts say a sustained recovery will ultimately depend on Kering’s ability to reignite sales growth at Gucci.

Pic courtesy: google/ images are subject to copyright