French luxury group Kering has unveiled a far-reaching strategic overhaul at its Capital Markets Day in Florence, as the group responds to mounting headwinds in the global luxury sector and ongoing weakness at Gucci.
The new roadmap, branded “ReconKering,” combines operational restructuring with a repositioning of brand strategies and reflects a broader shift in the industry — from expansion to discipline, and from volume to desirability.
CEO Luca de Meo framed the transformation as both a return to fundamentals and a forward-looking adjustment: “ReconKering is our way of reconnecting with what makes Kering unique, while embracing what luxury is becoming.”
De Meo also described recent performance as “an important first step in our recovery,” pointing to early effects of strategic measures despite a challenging geopolitical environment.
Kering CEO Luca de Meo: “In the first quarter of 2026, Group revenue stabilized, marking an important first step in our recovery and a further sequential improvement. This performance reflects the first tangible effects of our actions, despite a challenging geopolitical environment.”
Image © Renault
De Meo added that a “comprehensive turnaround” at Gucci is underway, with changes to product architecture and collections rolling out progressively. Analysts, however, remain cautious on the pace of recovery, citing limited visibility on when growth will return.
Stabilization Masks Structural Challenges
Kering’s first-quarter 2026 results underline the urgency of the reset. Revenue reached €3.57 billion, down 6% reported but stable on a comparable basis — an early sign of stabilization after a prolonged downturn.
However, the underlying picture remains uneven. Growth in jewelry and eyewear — including a record quarter for Boucheron — contrasts with continued weakness in the core Fashion & Leather Goods division.
At the center of the issue remains Gucci. Sales fell 14% (–8% comparable) to €1.35 billion, with declines in Asia-Pacific and Europe outweighing growth in North America. The brand’s prolonged repositioning remains the key drag on group performance.
Market reaction has been negative, with the share price galling after the results.
Gucci: Rebuilding Desirability
ReconKering places Gucci at the core of the transformation. The strategy focuses on restoring “desirability” — a recurring concept in the roadmap — through clearer brand codes, improved product coherence, and tighter distribution.
The brand is reshaping its product architecture across categories, with a renewed emphasis on leather goods, more consistent ready-to-wear, and higher quality standards. At the same time, regional strategies are being refined and the retail network streamlined.
De Meo emphasized the dual ambition of the plan: “True Luxury is our mission, and Next Luxury is our horizon,” highlighting a shift toward higher-end positioning combined with new capabilities.
Analysts remain cautious. While operational improvements and margin recovery appear achievable, the timeline for returning Gucci to sustainable growth remains uncertain — particularly in a weakening market.
A New Operating Model: Centralization With Scale
Beyond brand strategy, the most significant change lies in Kering’s operating model.
The group is introducing an integrated platform built around five hubs — industry, client, technology, sustainability, and support functions — designed to improve efficiency and execution across all Houses.
This includes:
- Greater control over manufacturing and supply chains, including a joint venture with Italian supplier HModa
- A unified, AI-driven client data platform
- Expanded use of cloud technologies and digital tools
- Stronger integration of sustainability across operations
The aim is to create scale where it adds value while preserving creative independence at brand level.
Kering is also reorganizing its reporting structure, with separate segments for Fashion & Leather Goods, Jewelry, and Eyewear — while continuing standalone reporting for Gucci — increasing transparency and accountability.
Diversification Beyond Fashion
The strategy also reflects a gradual diversification of the business model.
Jewelry is emerging as a key growth driver, supported by strong momentum at Boucheron, Pomellato, and Qeelin, as well as increased vertical integration. Eyewear continues to expand, with ambitions extending into connected products through a partnership with Google.
Under “Kering Next,” the group is also exploring new categories such as beauty (via L’Oréal), design, and longer-term opportunities in wellness and longevity — signaling a broader definition of luxury.
These strategic shifts are already reshaping retail real estate dynamics. Particularly as luxury brands reassess distribution, store networks, and location strategies.
Implications for Retail Real Estate
Kering’s repositioning signals a broader shift in how luxury brands approach physical retail with consequences for landlords, leasing strategies, and asset positioning.
Network optimization over expansion
Underperforming locations are likely to be closed or downsized, while investment will concentrate on flagship stores in key luxury hubs.
Focus on fewer, stronger locations
The group’s shift toward tighter distribution and higher brand control suggests a continued rationalization of store networks. As Gucci and other Houses refocus on higher-value clients, prime high streets and top-tier shopping centers are likely to benefit.
Pressure on secondary malls
The move away from volume-driven growth and broader distribution could further polarize the market. Brands are likely to reduce exposure in weaker locations. Secondary locations may face increasing pressure as luxury tenants become more selective.
Growing importance of experience and clienteling
With “desirability” and client engagement at the center of strategy, stores are expected to evolve toward more experiential formats, supported by data-driven clienteling and and closer integration with digital channels.
Selective expansion in growth categories
Stronger-performing segments such as jewelry and eyewear may drive targeted retail expansion, offering opportunities for landlords to rebalance tenant mixes within prime assets.
Luxury Market: Structural Headwinds Intensify
Kering’s challenges reflect a broader shift across the global luxury market, which is losing momentum after years of strong growth.
The sector shrank its active customer base by around 20 million in 2025, as sharp price increases and macroeconomic pressures pushed aspirational buyers out of the market. Since 2019, some luxury prices have risen by up to 50%, making products increasingly inaccessible to middle-income consumers.
As a result, growth is now heavily dependent on a smaller group of ultra-wealthy clients.
Geopolitical tensions are also weighing on performance, particularly in the Middle East, where Kering reported a double-digit decline in retail sales. Additional pressures include weaker tourism flows and rising tariffs.
At the same time, China — long the industry’s key growth engine — is weakening, with economic pressures and shifting consumer behavior reducing demand.
Consumer expectations are also evolving. Sustainability, product quality, and longevity are becoming more important, while resale and circular models are gaining traction.
These dynamics are visible across major players, including LVMH and Hermès.
From Expansion to Discipline
Another structural issue lies in past growth strategies. During the boom years, many brands expanded volumes and broadened their customer base — in some cases even moving into outlet-driven distribution (see Ken Gunn’s analysis: “The Growing Importance of Outlet Centers in Luxury Brand Strategy“).
This approach is now proving difficult to reverse without diluting brand equity. In contrast, Hermès continues to benefit from strict scarcity, controlled distribution, and a focus on ultra-high-end clientele.
Today, Kering’s approach is being reassessed. Reducing wholesale exposure, optimizing store networks, and focusing on fewer, stronger products are becoming priorities. The group is moving away from volume-driven growth toward a model based on brand equity, product excellence, and operational rigor.
Execution Will Determine Success
ReconKering outlines a clear timeline — reset by 2026, rebuild by 2028, reclaim leadership by 2030 — but success will depend on execution.
De Meo acknowledged the challenge, noting that the group is entering this phase “with ambition, humility and a deep confidence in our teams.”
For Kering, the stakes are high. The turnaround of Gucci remains critical, but the broader objective is to reposition the group for a new era of luxury — one defined less by scale and more by selectivity, discipline, and long-term value creation.
