Kering’s Fragile Recovery: Can Luca de Meo Revitalize Gucci and the Luxury Giant?
Kering, the parent company of luxury brands like Gucci, Yves Saint Laurent and Balenciaga, is navigating a challenging period. Recent fourth-quarter sales figures, released on Tuesday, February 10, 2026, revealed a smaller-than-expected 3% decline, reaching €3.9 billion. Although a slight improvement over initial forecasts, the results underscore the ongoing struggle to restore growth, particularly at flagship brand Gucci, which experienced a 10th consecutive quarterly drop – albeit a less severe 10% decline than anticipated.
Gucci’s Decade-Long Decline and the Demna Effect
Gucci’s struggles have been ongoing since 2022, following a shift away from the maximalist aesthetic championed by former designer Alessandro Michele. The appointment of Demna as Gucci’s new artistic director last year signaled a bold attempt to revitalize the brand. His debut collection, “La Famiglia,” aimed to reignite desirability. However, the full impact of this change remains to be seen.
New CEO Luca de Meo’s Turnaround Strategy
The pressure is on new CEO Luca de Meo, formerly of Renault, to steer Kering back on course. De Meo, appointed last year, is Kering’s first outsider CEO, bringing a fresh perspective to the luxury conglomerate. He acknowledges the work ahead, stating, “We’re still far from where we aim for to be. We don’t have everything in place yet, but we’re building every day with focus.”
De Meo’s strategy includes deleveraging the company’s balance sheet, demonstrated by the recent sale of Kering’s beauty segment to L’Oréal for €4 billion. This move allows the company to concentrate on its core fashion businesses and address its high net debt.
Broader Luxury Market Trends and Competitive Landscape
Kering’s challenges mirror those faced by the broader luxury sector. Following a pandemic-era boom, demand has cooled, and price increases have alienated some customers. Weak consumer demand from China, a key growth market, has also contributed to the slowdown. Competitors like LVMH, Burberry, Hermès, and Richemont have also experienced fluctuations, though Kering’s recent results sparked a positive ripple effect, boosting shares across the luxury space.
Looking Ahead: Growth and Margin Improvement in 2026?
Despite the recent headwinds, Kering anticipates a “return to growth and margin improvement” in 2026. The company plans to unveil a more detailed long-term strategy at its Capital Markets Day in April. De Meo emphasized decisive action is being taken to put the group back on the right trajectory.
Kering is also exploring new avenues for growth, including a foray into the wellness and longevity segment, and a refined jewelry strategy to be revealed in April. Analysts at Jefferies noted the closing stages of 2025 suggest reducing pressures, coinciding with more supportive industry conditions.
Pro Tip:
For investors tracking the luxury market, monitoring Kering’s progress is crucial. The company’s ability to revitalize Gucci and execute its turnaround strategy will be a key indicator of the sector’s overall health.
FAQ
Q: What caused Gucci’s sales decline?
A: A shift away from the aesthetic of former designer Alessandro Michele, coupled with broader economic challenges and changing consumer preferences, contributed to Gucci’s sales decline.
Q: Who is Luca de Meo?
A: Luca de Meo is the new CEO of Kering, previously known for successfully turning around Renault in the automotive industry.
Q: What is Kering doing to improve its financial situation?
A: Kering is deleveraging its balance sheet by selling non-core assets, such as its beauty segment to L’Oréal.
Q: What are Kering’s plans for future growth?
A: Kering is exploring opportunities in the wellness and longevity segment and refining its jewelry strategy.
Did you know? Kering’s shares jumped as much as 14% following the release of the fourth-quarter results, indicating investor confidence in the company’s turnaround potential.
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