Florence (Italy) (AFP) – French luxury group Kering promised Thursday to make its flagship Gucci brand once again “unmissable” and boost production of leather goods as it seeks to turn around its financial performance. Chief executive Luca de Meo presented a new strategy for the Paris-based conglomerate, which also owns Yves Saint Laurent and Bottega Veneta, to investors in Florence, home of its flagship double-G brand.
Italian fashion house Gucci is key to Kering’s fortunes, representing 40 percent of its revenues in 2025, but has been in freefall since 2023. Analysts say Gucci has lost its exclusivity, with too much streetwear and too many shops — a criticism implicitly accepted on Thursday by de Meo, who took over in September. In his speech to investors, he promised a “meaningful” upgrade in terms of quality, saying: “Clients notice quality, they notice consistency.”
“Trust is essential to rebuild desirability,” said the Italian, who previously helped turn around the fortunes of French carmaker Renault. “Our priority is to make Gucci unmissable again… In one second you must know it’s Gucci — and it doesn’t mean covering the world with GG,” he added. Kering as a whole will also lean in more to leather accessories, such as handbags and shoes. “The ambition is to have one billion euros of additional revenues in leather goods by 2030,” de Meo said.
However, Kering’s new plan — called ReconKering — failed to immediately conquer investors, with the group’s shares down 2.1 percent at 1000 GMT on the Paris stock exchange.
Killed desirability – Gucci 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. But “with the rise of streetwear, Gucci became omnipresent (…) That, to some extent, killed its desirability,” said Luca Solca, a sector specialist at the Bernstein firm, ahead of the strategy announcement. “In this sector, we sell something that consumers desire. If you give too much of something people like, after a while they won’t want it anymore,” he told AFP.
Flavio Cereda, a luxury sector specialist at GAM, an investment firm, added that Kering had “all sorts of issues” with distribution, products, and pricing. Last year, Kering brought in Georgian Gen Z streetwear favourite Demna as Gucci’s new artistic director, as well as poaching de Meo.
In the first quarter of 2026, Gucci once again saw its sales decline, by 14 percent to 1.35 billion euros, according to figures published on Tuesday. But the drop was eight percent on a like-for-like basis, which constitutes a slowdown from the previous quarter. Sales continue to shrink in key market China, while war in the Middle East is hitting demand there while turning consumers everywhere more cautious. Kering said on Thursday it would close some stores but boost marketing and sales budgets for all its brands in the Chinese market. “We have to do what we are forced to do in many other markets: downsize, refocus,” de Meo said in an interview with AFP. “I think luxury is changing in China, with an increasingly informed and demanding consumer,” he said. Luxury brands “will have to adapt to the fact that the world is becoming multipolar”, and “adapt their offering to different regions of the world”, he added.
Structural reset – Across the group, sales slid by six percent in the first quarter of this year — comparable to that suffered by rival LVMH. Kering plans a “structural reset” to be completed by the end of the year that will make it more efficient, to improve margins and restore financial discipline to its brands, the company said. It aims to double 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
