By Carol Ryan

Kering's surging stock shows investors don't want to miss out on what could become a big luxury turnaround story. But it is too early to get excited with the company's main brand Gucci so weak.

Full-year results Tuesday show the challenges facing new boss Luca de Meo, who joined Kering from the automotive industry.

Sales at Kering fell 10% last year and operating profits dropped a third. Selling luxury goods has high fixed costs-like the world's heftiest rent bills-so profits tumble when sales slip. Operating margins fell to 11%, their lowest since 2010.

De Meo has taken welcome moves to steady the business, selling property and offloading Kering's beauty business to L'Oréal. The incoming cash will pay down debt, which had worried investors.

He also plans to close as many as one in five stores. Heavily lossmaking brand Alexander McQueen is being restructured, and buying a stake in Italy's Raselli Franco will give Kering more heft in jewelry.

That makes sense. This is luxury's fastest-growing category and Kering only does around $1 billion a year in jewelry sales-far less than competitors Tiffany and Cartier.

Gucci remains in poor shape, though, making Tuesday's double-digit share-price jump difficult to justifiy. Quarterly sales fell 10% from a year earlier. And it will be hard for Kering to fully recover until the Italian brand is fixed, as Gucci usually generates two-thirds of total operating profit.

New designer Demna has his first runway show later this month. Kering bosses hope his collections will get shoppers back into Gucci stores and spending again-but those hopes haven't yet been borne out.

It looks like the worst is over for Kering. But as de Meo says, the recovery is early and fragile.

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February 10, 2026 07:03 ET (12:03 GMT)

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