Malte Karstan writes on LinkedIn: Gucci‘s 25% Sales Drop: A Wake-Up Call for Luxury Fashion — and a Crisis Point for Kering.

In Q1 2025, Gucci‘s sales plummeted by 25%, dragging parent company Kering‘s overall revenue down by 14% to €3.88 billion — well below market expectations of a 9.7% decline.

This sharp drop isn’t just a blip — it’s a reflection of mounting pressures inside the company and across the global luxury landscape.

What’s going wrong?

Internal Challenges:

1. Creative Instability:
Gucci has been in flux creatively, with frequent changes in leadership. The latest — Demna’s appointment as Artistic Director in early 2025 — is a bold move, but one that adds to brand inconsistency. Creative transitions, no matter how visionary, often disrupt momentum and consumer connection.

2. Strategic Missteps:
Kering recently shuttered 25 Gucci stores as part of an effort to recalibrate. While this may be aimed at sharpening brand focus, it also risks shrinking accessibility and global reach — especially dangerous in a climate where visibility is everything.

External Market Pressures:

1. Global Economic Slowdown:
Key markets — China, Western Europe, and North America — all reported double-digit sales drops. The luxury consumer is more cautious, and broad economic uncertainty is hitting even high-end spending habits.

2. Trade Tensions:
New tariffs and recession fears, particularly following recent announcements from the U.S. administration, are shaking consumer confidence — creating ripple effects in sectors that once felt recession-proof.

Market Context:

While Kering stumbles, competitors like Hermès are thriving — with a 7% revenue increase in the same period. The difference? Steady creative direction, crystal-clear brand identity, and unrelenting cultural relevance.

Takeaways:

• Market Saturation: Gucci’s wide reach may have diluted its exclusivity — once its greatest strength.
• Economic Headwinds: Luxury isn’t immune to macro pressures.
• Strategic Shifts: Kering’s leadership changes signal a pivot — but one that must land quickly and precisely.

Looking Ahead:

Gucci’s future hinges on a delicate balance: honoring its rich design heritage while making itself culturally vital again. All eyes will be on Demna’s creative vision to see whether it can spark a renaissance — or if the brand continues to drift.

Kering’s broader recovery will require more than store closures and leadership reshuffles. It needs clarity, consistency, and courage — the fundamentals of any comeback story.