^{A woman wearing a Gucci belt and bag is seen during Paris Fashion Week in September 2018}

^{Christian Vierig | Getty Images}

Kering has launched an ambitious multi-year turnaround strategy aimed at restoring growth, reviving its struggling flagship brand Gucci, and more than doubling profitability following a prolonged downturn in the global luxury sector.

The plan was presented during the company’s Capital Markets Day in Florence by CEO Luca de Meo, who took over leadership seven months ago. He delivered a blunt assessment of the group’s recent performance, stating that the business model that had driven a decade of success is no longer effective in today’s market environment.

According to the new roadmap, Kering aims to more than double its 2025 recurring operating margin of 11.1% and lift return on capital employed above 20% in the medium term. The strategy signals a decisive shift toward efficiency, brand repositioning, and tighter operational discipline after a year marked by declining sales and weakening demand in key markets.

Investor reaction was cautious. Shares initially fell as much as 5% before stabilizing to a decline of around 4% in early trading, reflecting uncertainty about the scale and timeline of the turnaround. Despite the skepticism, the plan represents one of the most comprehensive restructurings in the company’s recent history.

A central pillar of the strategy is the transformation of Gucci, which remains the largest contributor to Kering’s earnings but has experienced 11 consecutive quarters of organic sales decline. The brand has been affected by weaker demand in China, shifting consumer preferences, and broader post-pandemic normalization in luxury spending following a surge in pricing during earlier boom years.

Kering’s leadership acknowledged that Gucci has lost some of its momentum and global appeal. The new approach focuses on restoring clarity and desirability by simplifying product narratives, reducing design fragmentation, and reinforcing the brand’s core identity. Rather than expanding visibility through volume, the strategy emphasizes precision, craftsmanship, and stronger brand coherence.

Operationally, the company plans a major restructuring of its retail footprint. Around two-thirds of Gucci stores will be refurbished or relocated, while overall selling space is expected to be reduced by approximately 20%. Outlet stores will also be cut by about one-third. These changes are designed to increase sales density significantly, with a target of doubling revenue per square meter by 2030.

Inventory management is another key focus, with Kering aiming to reduce stock levels by approximately €1 billion over the next year. The company is also targeting incremental revenue growth across product categories, including €1 billion from leather goods, €600 million from ready-to-wear and footwear, and €500 million from jewelry and watches.

Beyond Gucci, the group is seeking to reduce its reliance on a single brand by strengthening its broader portfolio. Labels such as Yves Saint Laurent, Bottega Veneta, and Balenciaga will each play distinct strategic roles. Saint Laurent is positioned to reinforce its fashion authority and expand its presence in Asia, Bottega Veneta is being positioned as a benchmark for understated luxury, while Balenciaga is intended to appeal to younger, more experimental consumers.

The company has already taken steps to strengthen its financial position, including the sale of its beauty division to L'Oreal for approximately €4 billion in cash earlier this year, helping to reduce debt and refocus capital allocation on core luxury operations.

Despite the scale of the restructuring, analysts remain divided on the timeline for recovery. Some estimate that restoring Gucci to sustained growth could take several years, particularly given structural challenges in the luxury sector, including softer demand in China and shifting global consumption patterns.

The broader luxury market has also cooled after years of strong post-pandemic expansion. Price increases implemented during the boom period have contributed to consumer fatigue in some segments, while geopolitical uncertainty and uneven tourism flows have added further pressure.

Even so, Kering’s management argues that the group retains strong brand equity and long-term pricing power. The success of past turnarounds within the company, particularly at Gucci and Saint Laurent, is being cited as evidence that disciplined execution can restore growth, even in challenging market conditions.

However, industry observers note that luxury brand transformations have become increasingly complex, slower, and more expensive than in previous cycles. With heightened competition, more selective consumers, and weaker macroeconomic tailwinds, the path to recovery is expected to require sustained investment and precise execution rather than rapid fixes.

Kering’s latest strategy therefore represents both a defensive repositioning and an offensive reset—aimed at stabilizing its core business while rebuilding growth engines across its portfolio. Whether this recalibration can restore Gucci’s former dominance will likely determine the group’s performance over the next decade.