Global luxury group Kering, owner of brand Gucci, faces scrutiny over its latest strategic outline, which analysts suggest risks prioritising bold pronouncements over tangible detail. Kering is a global luxury group managing fashion, leather goods, jewellery, and watch brands. Its primary asset, Gucci, is a high-end fashion house known for luxury apparel and accessories. At its recent capital markets day, the company pledged to more than double its operating margin from 11% recorded in 2025. This target, however, barely exceeds analyst consensus of 20% by 2030 and remains well below the 30% peak achieved in 2019, with no specific timeline provided.
The lack of granular detail is evident regarding Kering’s flagship brand, Gucci, which generates approximately 60% of the group’s operating profit. Despite its critical importance, the luxury house offered no explicit margin target for Gucci, leaving a gap in its investment case. This omission comes amidst a period of struggle, with first-quarter sales falling 8% and revenue in its crucial Asian market dropping 14%. Execution missteps, including over-distribution in China, appear to be compounding macro weakness. CEO Luca de Meo’s “ReconKering” plan focuses on operational clean-up, including closing hundreds of stores, reducing outlets, and trimming inventory.
While these operational clean-up steps are sensible, near-term hurdles appear formidable. To achieve revenue growth in 2026, Gucci would require sharp acceleration in performance, which analysts deem ambitious. The wider luxury downturn further complicates the outlook. In contrast, US rival Tapestry’s brand Coach saw a 34% surge in China sales, attributed to refreshed designs and credible pricing. Kering faces the challenge of its European luxury positioning, trading on exclusivity and high price points, risking brand dilution with aggressive price cuts. Despite this, de Meo’s arrival offers cover for bolder moves. For now, Kering’s strategic blueprint appears incomplete.
