Kering's Strategic Shift in the Luxury Market
The luxury goods conglomerate Kering convened its general assembly recently, just weeks after unveiling a comprehensive strategic plan aimed at rejuvenating its brand portfolio. The luxury sector has been facing significant challenges, with declining sales and shifting consumer preferences necessitating a transformation within the industry. This assembly is particularly crucial as Kering, which manages prestigious brands such as Gucci, Saint Laurent, and Bottega Veneta, seeks to navigate this turbulent landscape.
Last September marked a pivotal moment for Kering when Luca de Meo was appointed as the new CEO, taking over from François-Henri Pinault, who retains the position of Chairman. De Meo's appointment comes at a time when the company is grappling with substantial debt and a marked decline in sales, which plummeted by 13% in 2025 to €14.7 billion, resulting in a net profit that was more than ten times less than previous figures. This downturn has compelled the company to reassess its operational strategies.
In an effort to stabilize the company, De Meo has initiated various measures aimed at reducing debt, which stood at €8 billion at the end of 2025—down €2.5 billion from the previous year. A significant move in this direction was the sale of Kering's beauty division to L'Oréal for €4 billion, alongside a postponement of the acquisition of Valentino by two years. These actions reflect a strategic pivot designed to streamline operations and focus on core brand strengths.
In April 2026, Kering outlined its medium-term strategy, placing a strong emphasis on Gucci, which has seen a downturn in consumer interest. The Italian luxury house, responsible for 40% of Kering's revenue, experienced a drop in sales from €10.5 billion in 2022 to €6 billion in 2025. To address this decline, the company plans to reduce the number of Gucci stores and enhance product quality, alongside appointing Francesca Bellettini as the new CEO of Gucci, who previously served as Kering's deputy CEO.
Furthermore, Kering is keenly focusing on revitalizing its presence in China, a previously robust market for luxury brands that has recently cooled. Plans include significantly increasing marketing and sales budgets while closing underperforming stores. Despite a nearly 20% decline in stock prices since the beginning of the year, attributed to geopolitical tensions affecting luxury brands, Kering has seen a year-on-year increase of approximately 38% in its stock value.
As reported by ma.fashionnetwork.com.
