Kering shares rose as much as 11% in Paris trading after Gucci reported quarterly sales above consensus, the first material evidence that CEO Luca de Meo's product overhaul is gaining traction with end consumers. The rally came against softer signals from Hermès and LVMH, both of which reported muted demand in their latest updates, creating the widest performance divergence across European luxury majors in eight quarters.
Gucci's outperformance appears tied to two new bag lines—Borsetto and Paparazzo—and a refreshed men's bag collection that resonated with buyers in Europe and North America. De Meo, who joined Kering in late 2023, has shifted the house toward jewelry as a margin lever while tightening SKU count in leather goods. The approach mirrors Bottega Veneta's 2019 playbook under Daniel Lee, though Gucci operates at roughly four times the revenue base. Kering did not disclose absolute sales figures for the new products, but broker notes suggest they accounted for mid-single-digit percentage points of Gucci's quarterly growth.
The contrast with Hermès is notable. The French house, historically immune to cyclical wobbles, reported subdued sales growth that missed Street expectations for the first time since Q1 2020. LVMH likewise pointed to softer traffic in Asia-Pacific, though it did not break out China specifically. Allocators reading across the three reports see a story less about brand strength and more about inventory discipline: Kering entered the quarter with cleaner stock after 18 months of destocking, while Hermès and LVMH still carry elevated leather goods inventory built during the 2021–2022 restock cycle. When demand softens even slightly, the delta shows up in same-store sales velocity.
China remains the variable. Luxury foot traffic in tier-one Chinese cities fell 7% year-over-year in June, per Exane BNP Paribas tracking data, and daigou reseller volumes—often a leading indicator—dropped 14% in the same period. Kering's relative outperformance suggests its lower China exposure (roughly 28% of group sales versus 35% for LVMH) acts as a structural hedge when mainland sentiment turns. Hermès, paradoxically the most China-levered at near 40%, now faces the margin question: can waiting-list discipline hold if aspirational buyers shift spend to travel or property.
Allocators should watch Kering's August wholesale orders, particularly in North America, where department store buyers place Fall/Winter 2025 commitments. If Gucci's direct-to-consumer strength translates to wholesale reorders, the turnaround thesis firms. Hermès reports semi-annual results in early September; any guidance cut to China same-store sales growth would confirm the demand crack is structural, not seasonal. LVMH's next datapoint is the Q3 trading update in mid-October, though Watches & Jewelry—its second-largest division—will release July sell-through figures to analysts within three weeks.
De Meo's jewelry bet hinges on whether Kering can take 200 basis points of category share from Cartier and Bulgari by year-end 2025. The Borsetto bag sold out in Milan and Paris flagships within 11 days of launch. That pace has not been seen at Gucci since the Dionysus bag cycle in 2016.