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PetitePaulina – S&P Global has shifted its credit outlook for Kering S.A. from stable to negative, signaling growing concerns over the company’s financial resilience. While the French luxury goods group retains its BBB+ rating, the negative outlook reflects mounting operational pressures and reduced flexibility to absorb future downturns. This change comes amid weaker-than-expected performance across several major markets, prompting investors to closely monitor Kering’s next moves.

Gucci Sales Slump Drives Overall Weakness

Gucci, Kering’s crown jewel, experienced a sharp 25% drop in sales during the first half of 2025 compared to the previous year. This is significant because Gucci contributed more than half of Kering’s core earnings (EBITDA) in 2024. The decline in demand has been particularly pronounced in the Asia-Pacific region, especially China, where sales fell by 22% year-on-year. Such figures suggest that consumer appetite for high-end fashion may be shifting, leaving Kering vulnerable.

Competition From Industry Leaders Intensifies

Kering’s struggles are amplified when compared with competitors like LVMH, Dior, and Hermès, which have maintained stronger sales momentum. Analysts point out that these rivals have managed to navigate the challenging luxury landscape more effectively, leveraging diversified product lines and stronger brand positioning. This performance gap highlights the urgency for Kering to execute a strategic turnaround.

Strategic Turnaround Plans Underway

In response to the sales slump, Kering has begun implementing a series of turnaround measures. These include revitalizing its brand image, adjusting pricing strategies, and enhancing customer engagement in key markets. However, S&P warns that execution risks remain high, particularly given the subdued global luxury market environment and heightened competition.

Leadership Change Brings Fresh Direction

To steer the company through this challenging period, Kering has appointed Luca de Meo, former CEO of Renault Group, as its new chief executive. De Meo is set to take office in mid-September 2025, bringing experience in brand transformation and operational efficiency. The leadership transition is seen as a pivotal moment for Kering’s future trajectory.

Outlook Remains Cautious Amid Uncertain Market

While Kering’s strong portfolio of brands offers a foundation for recovery, the immediate outlook remains clouded by weak consumer demand and macroeconomic uncertainty. Analysts stress that the company must deliver tangible results from its turnaround initiatives to avoid further credit downgrades. The coming quarters will be crucial in determining whether Kering can regain its competitive edge in the luxury market.