Kering resets for growth: cut stores, de-risk Gucci, redeploy capital
Bottom Line Impact
Kering is accepting a controlled near-term sales dip to structurally lift productivity and margins, reduce Gucci dependency, and rebuild multi-brand momentum, positioning the group as a more resilient challenger with stronger brand equity over the next 12-36 months.
Key Facts
5- Beauty divestiture agreed at €4.7b to L Oreal Luxe, providing liquidity to refocus on core luxury fashion
- 55 stores closed in the past 12 months, with further network downsizing planned in 2025
- 18-month timeline to get all brands back to growth; 3-year horizon to restore top financial performance
- Shares up approximately 75 percent since Luca de Meo was hired, after losing over 50 percent in the prior two years
- Investor day to present the full strategic plan slated for spring next year
Time Horizons
Executive Summary
Kering is executing a deliberate reset to reduce Gucci concentration, streamline its retail footprint, and recalibrate pricing after divesting beauty for balance-sheet firepower. The plan targets a return to growth within 18 months and top-tier financial performance in three years, trading near-term revenue pressure for improved capital allocation and portfolio resilience.
Actionable Insights
Immediate Actions (Next 30-90 days)
Set and disclose a Gucci concentration cap of 40-45 percent of group revenue by FY27 with brand-level growth targets for Saint Laurent, Bottega Veneta, and Balenciaga
Rationale: A clear cap reduces key-brand concentration risk, aligns capital allocation, and provides investors with measurable de-risking milestones
Role affected:CEO
Urgency level:immediate
Rebuild the price architecture with a 5-10 percent recalibration on entry categories in key regions and stricter distribution of icons to lift full-price sell-through by 300-500 bps
Rationale: Re-establishing price ladders and scarcity restores brand heat without broad discounting
Role affected:CMO
Urgency level:immediate
Short-term Actions (6-12 months)
Allocate beauty proceeds with a 40-50 percent deleveraging tranche, 30-40 percent strategic capex for store upgrades and hero product capacity, and 10-20 percent for selective M and A in hard luxury supply or craftsmanship
Rationale: Balanced deployment stabilizes the balance sheet while funding growth engines and margin-accretive capabilities
Role affected:CFO
Urgency level:short-term
Implement a store productivity threshold and exit plan targeting the bottom 15-20 percent of doors by sales per sqm and EBIT contribution, aiming for 10-15 percent uplift in sales per store within 12 months
Rationale: Pruning low-yield doors increases productivity, reduces fixed costs, and directs traffic to higher-impact flagships
Role affected:COO
Urgency level:short-term
Risks & Opportunities
Primary Risks
- Short-term revenue softness from accelerated closures and price recalibration could pressure 2025 top line
- Further dilution of Gucci brand heat if assortment transition and creative cadence misalign with client expectations
- Execution risk in jewelry where scale disadvantages versus peers may persist despite synergies
Primary Opportunities
- Portfolio rebalance toward multiple growth engines reduces volatility and supports a more resilient earnings base
- Store network optimization and tighter pricing can add 50-150 bps to operating margin over 12-24 months
- Shared services and joint sourcing in jewelry and leather can unlock €50-150m annual run-rate efficiencies by FY27