Kering's new CEO, Luca de Meo, formerly of Renault, is undertaking an ambitious turnaround plan to double the company's recurring operating margin from 11% in 2025 by around 2030, and to gradually outperform market sales growth. This strategy addresses Kering's recent sales deceleration, significant debt, and Gucci's underperformance, which saw an 8% drop in sales in Q1.
De Meo has already taken steps to strengthen Kering's financial position, including a $4 billion agreement to sell the beauty business to L'Oreal and the sale of approximately $1.5 billion in high-end real estate in New York and Milan. These actions have reduced Kering's debt from $10.5 billion at the end of 2024 to $8 billion at the end of 2025, with further reductions anticipated. The plan also includes closing over 100 stores in 2026, following the closure of 75 in 2025, to rationalize the store network.
A key focus of de Meo's strategy is revitalizing Gucci, which accounts for over 40% of Kering's sales and has seen its desirability ranking drop. He aims to restore Gucci's position as a top-five luxury brand by rebuilding its appeal. Specific initiatives include reducing the number of SKUs by 20% to simplify the product offering, aiming for over $1 billion in additional revenue from leather goods by 2030, and over $600 million from ready-to-wear and shoes. Additionally, there's a goal to generate an extra $500 million from jewelry and watches, with a particular emphasis on the $3,000 women’s jewelry watch segment.
The turnaround involves establishing a "streamlined group platform" with five hubs focusing on industry, client, technology, sustainability, and support functions, which de Meo describes as a "rebalance" rather than centralization. He emphasized collective leadership by bringing Kering's brand CEOs and creative directors on stage, including Gucci's Francesca Bellettini and Demna, to signal a unified approach to executing the new strategy. Kering Chairman François-Henri Pinault has expressed confidence in de Meo's ability to replicate his turnaround successes from the automotive industry.
