Kering's "ReconKering" Strategy: A Comprehensive Turnaround Plan for Gucci

Kering SA, the French luxury conglomerate, has unveiled its ambitious turnaround strategy, dubbed "ReconKering," aimed at revitalizing its flagship brand, Gucci, which has faced significant sales declines. The plan, presented by CEO Luca de Meo, seeks to more than double the company's recurring operating margin from 11.1% by 2030 and enhance its return on capital employed to over 20%. This strategic initiative comes in response to Gucci's 11 consecutive quarters of organic sales decline, exacerbated by geopolitical tensions and a downturn in consumer demand, particularly in China.

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The "ReconKering" strategy encompasses several critical objectives. Kering plans to refurbish or relocate two-thirds of its Gucci store network, reduce overall selling space by 20%, and cut the number of discount outlets by a third. Additionally, the company aims to decrease inventory by €1 billion over the next year and generate significant revenue increases across various product categories, including €1 billion from leather goods, €600 million from ready-to-wear and shoes, and €500 million from jewelry and watches.

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Kering reported a net loss of €29 million in 2025, a stark contrast to the €1.02 billion profit from the previous year. The decline was attributed to restructuring costs and a 33% drop in recurring operating profit. Analysts have expressed skepticism regarding Gucci's recovery, noting that the brand's recent performance has lagged behind competitors like LVMH and Hermès, which have shown resilience in the luxury market.

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Luca de Meo emphasized the need for Gucci to regain its desirability and acknowledged the brand's recent struggles. He stated, "Our priority is to make Gucci unmistakable... sharper, stronger, and more coherent." De Meo's roadmap includes a structural reset by the end of 2026, followed by a phase of sustainable growth by 2028, ultimately aiming to reclaim Kering's leadership in the luxury sector by 2030.

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Despite the ambitious goals, analysts remain cautious. Luca Solca from Bernstein Research remarked, "Delivering top-line growth ambitions at Gucci now seems like a tall order," highlighting the complexities of brand turnarounds in the current market. Citi analyst Thomas Chauvet echoed this sentiment, noting that luxury brand recoveries have become increasingly challenging and less favorable for public markets.

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Looking ahead, Kering's strategy will focus on enhancing the performance of not only Gucci but also other brands within its portfolio, including Yves Saint Laurent, Bottega Veneta, and Balenciaga. The company aims to leverage the distinct identities of its brands while fostering synergies across the group. As Kering navigates these challenges, the effectiveness of the "ReconKering" strategy will be closely monitored by investors and industry analysts alike.

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• "Our priority is to make Gucci unmistakable." — Luca de Meo, CEO of Kering

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• "Delivering top-line growth ambitions at Gucci now seems like a tall order." — Luca Solca, Analyst at Bernstein Research

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• "Luxury brand turnarounds have become more complex, slower, costlier, and far less public-market-friendly than in the past." — Thomas Chauvet, Analyst at Citi

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Kering's "ReconKering" strategy represents a critical juncture for the luxury group as it seeks to restore Gucci's prominence and profitability amidst a challenging market landscape.

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