Kering CEO Luca de Meo used a Capital Markets Day in Florence on Thursday to lay out an ambitious turnaround plan for the ailing French luxury group, targeting a recurring operating margin of at least 22 percent in the medium term — more than double the 11.1 percent the group recorded in 2025.
The plan, branded “ReconKering,” is structured in three phases: completing a structural reset by the end of 2026, entering a rebuild phase of sustainable growth by the end of 2028, and reclaiming what de Meo described as “leadership as the reference player in Next Luxury” by 2030. The group also aims to gradually outperform its luxury sector peers in revenue terms and improve return on capital employed to above 20 percent mid-term.
The backdrop is sobering. Kering posted a net loss of 29 million euros in 2025, compared to a net profit of 1.02 billion euros the previous year. Recurring operating profit fell 33 percent to 1.63 billion euros. First-quarter 2026 revenues declined 6.4 percent to 3.57 billion euros, sending shares down 9.3 percent on Wednesday. Gucci — which accounts for 59 percent of the group’s operating profit — reported a 14.3 percent drop in reported sales in the first quarter, its 11th consecutive quarter of negative organic growth.
De Meo was direct about what the plan requires. “Everyone in our industry talks about luxury. For me, beyond desirability, the word that truly matters is excellence. Luxury is a perception. Excellence is a discipline,” he told journalists, equity analysts and investors assembled in Florence — alongside the group’s creative directors, including Gucci’s Demna, Saint Laurent’s Anthony Vaccarello, Balenciaga’s Pierpaolo Piccioli and Bottega Veneta’s Louise Trotter.
Gucci’s recovery is central to the entire strategy. De Meo said the recovery “will be real because it will be structural,” and outlined ambitions to add 1 billion euros in leather goods business by 2030, 600 million euros from ready-to-wear and shoes, and grow watches and jewellery from 200 million to 700 million euros. Sales density in Gucci boutiques, along with icon product sales, are also targeted to double.
Across the group, Kering plans to close at least 100 more stores this year, renovate two-thirds of its retail network by 2030, and double its business with top-tier clients — who already account for roughly a quarter of luxury consumption. It aims to maintain capital expenditure between 5 and 6 percent of revenue and a dividend payout ratio of around 50 percent of recurring net profit.
Analysts were cautious. TD Cowen’s Oliver Chen noted that Gucci’s improvement has taken “longer to materialise than investors initially expected” and said he needed to see more consistent momentum across regions — particularly China — before turning more positive. Bernstein’s Luca Solca warned that delivering top-line growth at Gucci now looks like a tall order. Citi’s Thomas Chauvet observed that luxury brand turnarounds have become “more complex, slower, costlier, and far less public-market-friendly than in the past.”
For de Meo, who joined from Renault in September and has already moved to cut debt and streamline operations, Thursday was a chance to demonstrate that the plan is more than aspiration. “The transformation we’re driving is not the project of one individual,” he said. “Our collective target will be to bring that clarity and decisive action to ensure that execution, and not just vision, defines our ambition.”