Kering unveils recovery plan, aims to more than double profit margin

French luxury giant Kering has announced a recovery plan as the group continues to struggle. On Thursday, it revealed measures that include more than doubling its operating margin rate in the medium term.

The group began a transformation last year under its new chief executive officer, Luca de Meo. It now aims to achieve an operating margin rate of at least 22 percent in the medium term, it said in a statement, without specifying an exact timeline.

Kering's strategy for its revival

Kering also plans to dedicate 5 to 6 percent of its turnover to developing sustainable organic growth for its houses. The group is also considering targeted acquisitions, particularly to secure its raw material supplies.

The group aims for a “progressive outperformance of the market,” it said, without providing further details. Changes are also being implemented for Gucci, which has particularly struggled in recent years. The Italian brand generates approximately 40 percent of the group's turnover. For Gucci, Kering plans “a strengthened leather goods offering” and “higher quality standards”.

“More targeted local strategies and an optimised distribution model will allow the brand to be more relevant in its markets, strengthen its exclusivity and guarantee its speed of execution,” Kering stated.

Furthermore, the company is considering acquisitions “aimed primarily at strengthening know-how, vertical integration and securing raw materials,” it specified. The group did not disclose the amount that could be dedicated to these operations.

These announcements were made just before Luca de Meo presented Kering's new strategy to investors in Florence, the birthplace of Gucci, on Thursday morning.

Like other companies in the sector, Kering has suffered from a slowdown in recent years. This was caused in particular by weaker demand in China, one of the main luxury markets.

The group has also suffered from a significant decline in Gucci's popularity. The Italian house has a new CEO and a new artistic director, Demna Gvasalia, who presented his first collection in the autumn. However, these efforts have yet to yield results.

In the first quarter, Gucci's sales fell by 14 percent, or 8 percent on a like-for-like basis, which was below expectations. Kering's total turnover for the period fell by 6 percent, remaining stable on a like-for-like basis.

This article was translated to English using an AI tool.

OR CONTINUE WITH

Gucci

Kering