Kering's Rediscovery: Back to Growth, But the Real Story is the Reinvention
After a brutal downcycle, Kering returns to growth in Q2 — led by jewelry, eyewear, and a cautiously reviving Gucci, while new engines like Formula 1 and AI take shape.
KER.PA · Earnings Call · 2026-07-28
A Return to Growth, and a Shift in Narrative
At the heart of Kering's H1 2026 results is a simple but loaded sentence from CEO Luca de Meo:
H1 has been about turning strategy into action and action into results.
The action is visible in the numbers: the group returned to growth in Q2, with comparable sales up 2% after a stable Q1, and recurring operating margin expanding 40 basis points year-on-year to 12.8%. The CFO Armelle Poulou put it plainly: “The group is back to growth in the second quarter.” — Armelle Poulou, Chief Financial Officer · 2026-07-28 This marks the first quarter of growth in twelve, and it comes despite 84 net store closures in the first half — a sign that the productivity of the remaining network is improving.
The market had been waiting for a Gucci inflection, and while the house is still declining (-2% comparable in Q2), the sequential improvement is tangible. “We are beginning to see encouraging signs in the business itself with Gucci retail improving by 7 points sequentially in Q2” — Luca de Meo, Chief Executive Officer · 2026-07-28 says Luca. This is a far cry from the cautious tone of the February 2026 call, where he told analysts: “We see a lot of positive signs, including at Gucci.” — Luca de Meo, CEO · 2026-02-14 The difference now is that the signs are becoming numbers.
Beyond Gucci: Diversification That Works
While Gucci is the most watched brand, the real growth story at Kering is the steady outperformance of its other pillars. Kering Jewellery grew 20% year-on-year in H1, with Boucheron hitting record levels; Kering Eyewear accelerated to 8% growth. These are not peripheral businesses anymore — they are becoming the stabilizers of the group. As Luca noted, "We are not just a Monobrand company anymore" (paraphrased). This diversification is a deliberate brand desirability play: by investing in high-potential categories like jewelry and eyewear, Kering hedges against the volatility of fashion cycles.
One of the most striking new initiatives is the partnership with Alpine Formula 1 and the creation of Gucci Racing. Luca is positioning this as more than a sponsorship: “So I believe that there is a real opportunity to make business out of it.” — Luca de Meo, Chief Executive Officer · 2026-07-28 It is a fresh way to energize the brand, particularly among younger, global audiences. The L’Oréal beauty license, announced a year ahead of schedule, adds another long-term growth engine. These moves are company-unique and represent a strategic pivot beyond the traditional fashion-house model.
Operational Discipline and the China Question
The financial discipline is evident. “We are quite confident that we can reduce OpEx on the full year” — Armelle Poulou, Chief Financial Officer · 2026-07-28 says Armelle, after cutting OpEx 5% in H1. This is not just cost-cutting; as she emphasizes, it is "smarter spending" that protects brand investments. cost discipline is a recurring theme in Kering's own keyword trajectory, but now it is being executed with precision. The company also reduced net financial debt by €4.7 billion, largely via real estate disposals and the beauty deal, strengthening its balance sheet.
China remains the thorniest issue. Luca acknowledged the need for a dedicated action plan, admitting that Kering has not captured the potential of the market. In the February call, he had said: “We are projecting and we're working on recovering in terms of growth for '26, but it will be gradual along the year.” — Jean-Marc Duplaix, COO · 2026-02-14 That gradual recovery is now visible, with Mainland China improving sequentially even if still negative. The company's keyword trajectory shows a growing emphasis on inventory management and return to growth, reflecting the new operational priorities.
A New Kering?
The most interesting signal is the breadth of new initiatives: Formula 1, AI-powered clienteling, the group platform, and the China action plan. These are not incremental tweaks but systemic changes to how Kering operates. The CEO is building a "platform" culture, leveraging shared capabilities across houses. This is a deliberate departure from the previous siloed structure. As the keyword trajectory shows, terms like "cultural relevance," "client engagement," and "retail excellence" are gaining momentum, while old standbys like "Leather goods" and "Bottega Veneta" still dominate but no longer define the narrative.
In the grand scheme, Kering is telling a story of controlled reinvention. The market is watching whether the Q2 growth is a blip or the start of a sustained recovery. The cost discipline and the new engines — jewelry, eyewear, and Gucci Racing — suggest it might be real. The guidance for growth and improved profitability in 2026 has been reaffirmed, and the tone is confident without being complacent. For investors, the question is no longer whether Kering can stabilize, but whether the new Kering can actually scale. That is a far more interesting debate.