De meo unveils ‘reconkering’: kering bets big on challenger status amid luxury market reset

Luca de Meo has laid out a bold new strategy – ‘ReconKering’ – designed to propel Kering into the role of a luxury industry disruptor, a move crucial as the sector confronts a period of significant slowdown.

Shifting gears: kering’s ambitious plan for growth and resilience

At Thursday’s Capital Markets Day in Florence, de Meo outlined a comprehensive overhaul, stretching for a grueling 3.5 hours and punctuated by a rapid-fire Q&A session with analysts. The Italian executive, previously at Renault where he spearheaded the ‘Renaulution’ turnaround, isn’t intimidated by the challenge – quite the opposite. He views positioning Kering as a ‘challenger’ as a strategic advantage, demanding agility and a willingness to identify opportunities others miss.

The plan centers on dramatically increasing Kering’s operating margin to around 2030, aiming for more than double the current 11%. This ambitious target coincides with a recalibration of the luxury market, marked by contraction in key regions like China, forcing Kering to reconsider its approach.

Strategic shifts: cuts, investments, and a new global focus

De Meo has already taken decisive action, including postponing the acquisition of Valentino, selling the beauty division to L'Oréal, and reshuffling leadership. The move to Florence – Gucci’s birthplace – underscored his commitment to the group’s heritage. But ‘ReconKering’ goes deeper than mere restructuring; it’s a fundamental reimagining of Kering’s operating model, built around five interconnected ‘hubs’: industry, client, technology, sustainability, and support. This isn’t about centralized control, de Meo emphasized; it’s a strategic rebalancing of resources.

The strategy includes significant store rationalization – closing at least 100 locations over the next two years – alongside a substantial increase in marketing investment in China, estimated to be double the current level. Recognizing the importance of local tastes, Kering is adapting its offerings and refining its retail footprint. Furthermore, a minority investment in Chinese brand Icicle signals a desire to forge deeper connections within the Chinese ecosystem, understanding the nuances of the market firsthand.

Brand-specific strategies: gucci at the forefront

Gucci, representing over 40% of Kering’s revenue, remains a key focus. De Meo acknowledged the brand’s decline in desirability, aiming to reclaim its position as a top-five luxury player. The brand's streamlined SKU count – reduced by 20% – is a concrete step towards clarity and impact. Demna’s latest collection, La Famiglia, has already demonstrated promising results in China, with products like the Borsetto handbag showing strong uptake. Beyond Gucci, Saint Laurent is pursuing a similar strategy, doubling its business in Asia and investing heavily in leather goods. Bottega Veneta, under new leadership, is prioritizing scale while maintaining its signature craftsmanship.

Looking further afield, Kering is targeting growth markets like Southeast Asia, India, the UAE, and Saudi Arabia, recognizing the potential for long-term expansion. The jewelry division, spearheaded by brands like Boucheron and Qeelin, is also poised for significant growth, with plans to double revenues by 2030. And a new partnership with L’Oréal will fuel innovation in the wellness and longevity space, leveraging both companies’ expertise.

A measured approach to risk

While de Meo’s vision is ambitious, he’s adopting a cautious approach to acquisitions, prioritizing organic growth. However, a dedicated ‘House of Wonders’ initiative will selectively back promising emerging brands, fostering innovation without exposing the group to excessive risk. ‘ReconKering’ isn’t simply a plan; it’s a declaration: Kering is ready to not just compete, but to lead.