Florence (Italy) (AFP) – French luxury group Kering vowed Thursday to “reignite desirability” of its flagging Gucci label, once the jet set’s most coveted brand, as it seeks to turn around its financial performance. The giant Paris-based fashion conglomerate, which also owns Yves Saint Laurent and Bottega Veneta, chose Florence, the birthplace of its flagship double-G brand, to unveil its turnaround plans to investors.
Kering plans a “structural reset” to be completed by the end of the year that will make it more efficient in order to improve margins and restore financial discipline to its brands, the company said. Kering promises to offer “the agility of a challenger, a renewed focus on desirability and a stronger commitment to execution,” Chief Executive Luca de Meo said in a statement. Whether Kering’s new plan — called ReconKering — will be enough to revive the struggling Gucci brand is yet to be seen, especially given the tough selling environment facing the entire luxury sector amid geopolitical tensions and more cautious consumer spending.
Long the bright spot in Kering’s portfolio and the darling of the fashion set before the Covid pandemic, sales of Gucci have since slumped by over a third to six billion euros last year. While Gucci accounted for two-thirds of Kering’s sales in 2019, that share fell to under 40 percent in 2025, pointing to its lackluster reception by luxury shoppers. Profitability also sagged over this period. Last year, Kering brought in Georgian Gen Z streetwear favorite Demna as Gucci’s new artistic director while poaching De Meo from Renault, where he revitalised the automaker’s lineup and financial performance.
Kering said it will go about “reigniting desirability by refocusing the brand around what makes it unmistakably Gucci, with clear creative direction, disciplined codes and a revitalized heritage with true cultural impact.” Sales in Gucci’s first quarter declined by 14 percent to 1.35 billion euros, hit by shrinking demand in its key market of China and a cautious consumer environment due to the war in the Middle East. Shares of Kering fell nearly two percent on the Paris stock exchange, underscoring investors’ tepid response to the turnaround plans.
Kering gave few clues as to how exactly it would right the ship at Gucci, which enjoyed its headiest days under designer Tom Ford in the 1990s, who turned the leather goods brand into a fashion powerhouse beloved of the jetset. “Gucci has had all sorts of issues. It’s had issues on distribution. It’s had issues on product. It’s had issues on pricing,” said Flavio Cereda, a luxury sector specialist at GAM, an investment firm, ahead of the investor day. “Do people care about Gucci today? I don’t think they do. Can people care about Gucci in six months’ time? It’s perfectly possible. We just don’t know.”
Kering said a new group platform will consolidate key functions such as purchasing, logistics, research and development, and quality control for all its brands. That will allow each brand within the portfolio to operate with more “power, speed and efficiency,” Kering said. For the group as a whole, Kering envisions doubling its recurring operating margin in the medium term to reach at least 22 percent, while improving its return on capital — another measure of profitability — by 20 percent, helped by more controlled inventory and selective investments. By the end of 2028, Kering said, the group “will be in a phase of renewed, sustainable growth.”
© 2024 AFP
