kering Announces major Restructuring Plan to Reduce gucci Dependence and revitalize Portfolio
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Kering,the French luxury group,is embarking on a sweeping multiyear restructuring plan aimed at lessening its reliance on flagship brand Gucci and streamlining its global retail operations. The initiative, outlined in an internal memo from newly appointed CEO Luca de Meo, signals a significant shift in strategy for the conglomerate, which also owns brands like Saint Laurent, Bottega Veneta, and Balenciaga.
Facing Declining Sales and Profitability
Kering’s need for drastic action is underscored by recent financial performance. Like-for-like group sales have fallen 12 percent in the first nine months of 2025, totaling €11 billion. Shares in the company experienced a 3.2 percent dip in Paris trading on Wednesday, despite a previous rally following de Meo’s appointment last spring, ultimately valuing the company at €37 billion. According to the memo, Kering’s profitability has been significantly impacted by expanding operating expenses and investments coinciding with declining sales, leading to a decreased return on capital, increased net debt, and a loss in share price value.
“ReconKering”: A Two-Phase Turnaround
De Meo’s plan,dubbed “ReconKering,” is structured around two key phases. The first 18 months will focus on resizing Kering’s operations and restoring growth across all brands. Within 36 months, the goal is to achieve “top financial performance” and successfully reposition each brand within the luxury market. The plan was formulated in September and has already been broadly communicated to employees to foster a shared understanding of the company’s future direction.
Gucci’s Struggles and the Need for Diversification
The core of the challenge lies in Kering’s heavy dependence on Gucci, which currently accounts for approximately half of the group’s sales and two-thirds of its profits. Though, the Italian brand has lost momentum, hampered by a series of unsuccessful creative director and CEO changes and an overreliance on the Chinese market, which is currently experiencing economic headwinds. De Meo’s strategy centers on reigniting Gucci’s appeal while simultaneously bolstering Kering’s other brands – Saint Laurent, Bottega Veneta, and Balenciaga – to create a more balanced portfolio.
Strategic Reviews and Potential Job Cuts
All of Kering’s brands are currently undergoing a comprehensive strategic review led by consulting firms Bain and BCG. Several sources with knowledge of the situation indicate that Alexander McQueen, a consistently lossmaking brand, is likely to be among the first to experience job cuts as the long-term plan for the fashion house is finalized.
Immediate Actions and Cost Control
De Meo’s “First 100 day no-brainer” actions prioritize debt reduction and cost control. This includes a thorough analysis of Kering’s retail network to identify underperforming locations for potential closures and lease renegotiations. The CEO also emphasized the need to restructure the budget process and adopt a more conservative approach to costs and investments. Investors have expressed growing concern regarding previous high-priced acquisitions and real estate deals. A “multi-brand task force” will be established to address excess inventory,and product and pricing strategies will be reevaluated on a brand-by-brand basis. Marketing spend will also be scrutinized for efficiency, including renegotiating supplier terms.
Retail Network Rationalization and Wholesale Strategy
The restructuring extends to Kering’s extensive retail network. De meo wrote that a comprehensive analysis is needed to pinpoint underperforming locations and identify opportunities for rationalization. However, the memo also suggests a selective expansion of “qualitative wholesale exposure” as a complementary strategy.
De Meo concluded by emphasizing a spirit of ambition and humility, telling staff, “We’re the challengers, but we’re second to none: we remain humble, and we are driven by our ambition.” A new strategic plan, building on these initial hypotheses, is slated for release in spring 2026.
