Gucci’s Sales Are Crashing — What’s going on?

The company led by François-Henri Pinault has seen a 14% drop in activity during the first three months of 2025.

Let’s talk about the elephant in the (very expensive, designer-clad) room.

Gucci just posted a 25% sales drop in Q1 2025. That’s not a dip — that’s a full-on nosedive. And it’s dragging down Kering (Gucci’s parent company) with it, slicing -14% off their total revenue.

So, what’s happening? Is luxury fashion’s golden child losing its shine? Or is this just a bump in the road for one of the world’s most iconic brands?

Let’s deep dive.

The Numbers Don’t Lie — This Is Grim

Gucci’s sales down -25% (yes, you read that right). Kering’s overall revenue fell 14% (€3.88 billion, missing forecasts). Meanwhile, Hermès is up +7%, proof that people are still buying luxury… just maybe not Gucci. This isn’t just a “slow quarter.” This is a five-alarm fire for Kering.

Why Gucci’s Struggling?

Creative Chaos.

Gucci’s had more creative directors than some people have had hot dinners. Alessandro Michele’s departure in 2022 left a void, and while Demna’s 2025 takeover is exciting (hello, Balenciaga vibes), it’s also risky.

But here’s the problem: Gucci’s identity is getting muddled. Is it glam? Edgy? Streetwear? High art? Brand loyalty dropped -18% after Michele left (Morgan Stanley, 2024). My take is, Demna’s genius, but can he make Gucci feel like Gucci again?

Kering shut down 25 Gucci stores recently to “boost exclusivity.” Sounds smart… until you realize,

Luxury shoppers still love physical stores (55% of sales happen IRL, per Bain & Co.). People want touch and feel product. They want to walk around the city with the Gucci shopping bag on their arm. It adds to the allure and exclusivity.

Hermès and Louis Vuitton are opening more locations, not closing them. Many years ago when I worked in Selfridges, the amount of money rich tourists spent on impulse was jaw dropping. So much so that the department store decided to extend store hours to capitalize on this — and it worked.

Gucci’s sales in China dropped -20%. Why? China’s economy is shaky. This is a combinations of property crisis, local brands rising (shout out to Icicle), and the recent U.S. tariffs.

Meanwhile, Hermès is winning. While Gucci flails, Hermès is thriving +7%. With Hermès, there is no identity crisis. You know exactly what you’re getting and the message is lasting — timeless, ultra-luxury. Their scarcity model increases the desire and demand — Good luck getting a Birkin without a waitlist. The brand mastered quiet luxury with logo-less aesthetics while Gucci went too mainstream while over-saturating products and collaborations.

So, what’s next for Gucci?

Demna’s first collection is make-or-break. Kering needs to pivot from the creative musical chairs — Let Demna work his magic, but give it to let it steep. Fix the retail strategy with a streamlined and coherent collection.

Gucci isn’t going anywhere. But this is a wake-up call.

The 2020s luxury boom made brands lazy — thinking hype alone could keep them relevant. But 2025’s shoppers want meaning, not just logos.

My prediction?

If Demna delivers a cohesive, fresh-but-familiar vision, Gucci bounces back. But, if Kering keeps panicking and flipping strategies, the decline continues and Gucci will become a shell of its former self.

Either way, this is the most fascinating fashion story of the year. Buckle up.