cent in Paris trading on Thursday, extending a rally that has nearly doubled the stock since Luca de Meo’s appointment was announced in June. “Kering’s third-quarter performance, while representing a clear sequential improvement, remains far below that of the market,” Luca de Meo, CEO of Kering Group, said in an announcement. “This reinforces my determination to work on all dimensions of the business to return our houses and the Group to the prominence they deserve.” “We are working relentlessly on our turnaround, as shown by our recent decisions,” he added.  His first major move came just days before the earnings report: A €4 billion deal to sell Kering Beauté, including the House of Creed, to L’Oréal, marking a reversal from his predecessor François-Henri Pinault’s strategy of diversification. Sign of recovery  While the company’s latest quarterly performance may still be underwhelming, in the context of a bruising year for the group, the smaller-than-expected decline looks like progress. By channel, sales from the directly operated retail network fell 6 per cent on a comparable basis, improving from a 16 per cent drop in the previous quarter. Wholesale revenue slipped just 2 per cent, a modest contraction after months of steep declines. The group’s total revenue for the first nine months stands at €11 billion, down 12 per cent compared to last year. At €1.3 billion in third-quarter revenue, Gucci’s sales were down 14 per cent comparably, a significant improvement compared to the 25 per cent drop in the second quarter. Elsewhere in the portfolio, Yves Saint Laurent posted a 4 per cent comparable decline. At the same time, Bottega Veneta eked out 3 per cent growth on a similar basis, driven by strong demand in North America and the success of its new Campana bag. Other houses, which include Balenciaga, Alexander McQueen and Brioni, collectively rose 1 per cent comparably.  Kering’s jewellery division remains a quiet engine of growth. Boucheron, Pomellato and Qeelin all posted double-digit gains, with Boucheron’s US and Asia Pacific performance standing out. Restoring Gucci’s shine The biggest question remains Gucci, which still accounts for nearly half of Kering’s sales. The Italian house, once Kering’s golden goose, has been struggling with creative inconsistency and softening demand, particularly in China. Much of the rebound came from a stabilising retail network, where sales dropped 13 per cent, helped by stronger momentum in North America and Western Europe. New leather goods lines performed well, signalling that creative director Demna’s debut collection, shown in September, may be gaining traction. Wholesale sales, by contrast, slumped 25 per cent as Kering continues to tighten distribution to preserve brand equity. Towards the end of the quarter, Gucci presented its La Famiglia collection, an attempt to re-root the brand in its Italian heritage and family-driven storytelling. The reception, according to early indications, was better than many feared after several years of creative whiplash following Alessandro Michele’s departure. The market’s patience  Investors seem to believe de Meo’s approach is working. Kering’s stock has rallied nearly 100 per cent since June. The appeal of de Meo lies not in short-term numbers but in his perceived ability to bring executional rigour to a company that has long been seen as creatively led but operationally uneven. His background in the automotive industry may offer exactly the kind of discipline Kering has lacked. “Luca de Meo arrived with a reputation for pragmatism, and he is already making the necessary decisions to get Kering’s cash flow back in order,” Mathew Dixon, partner at DHR, said.  De Meo has signalled that he will not wait for the publication of a formal strategic plan before making tough decisions. The beauty sale was one; more restructuring could follow. “The elephant in the room is how Kering is making business. Its core business,” Susanna Nicoletti, luxury consultant and columnist, said on LinkedIn.  “Divisions and brand disposals are in the pipeline to reduce debt, but how is the business going to be rebuilt? Very hard cuts in terms of stores and human resources, and all fixed costs are requested to stay alive.”