FLORENCE, Italy – Kering aims to more than double its 2025 recurring operating margin in the “mid-term” as part of the turnaround plan that will be detailed by its chief executive officer Luca de Meo in Florence on Thursday.
Profitability will be supported by “a stronger mix, focused execution and operational rigor across the group,” the owner of brands including Gucci, Saint Laurent and Balenciaga said in a statement.
Kering posted a net loss of 29 million euros in 2025, versus a net profit of 1.02 billion euros the previous year, reflecting nonrecurring items mostly related to optimization and restructuring measures.
Recurring operating profit was down 33 percent to 1.63 billion euros, and the recurring operating margin fell to 11.1 percent in 2025 from 14.5 percent the previous year. Gucci accounted for 59 percent of the group’s operating profit last year.
Kering detailed several other targets, including to gradually outperform its luxury sector peers in revenue terms, and structurally improve return on capital employed (ROCE) to above 20 percent mid-term – though it did not specify the exact timeframe.
It aims to maintain a capital expenditure envelope of between 5 percent and 6 percent of revenue, and a dividend policy targeting a payout ratio of around 50 percent of recurring net profit.
De Meo was due to detail his strategic roadmap under the banner “ReconKering” during Kering’s Capital Markets Day in Florence, with the aim of promoting clearer prorities, better accountability and faster decision-making.
It is articulated around 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 the group’s “leadership as the reference player in Next Luxury” by the end of 2030.
“ReconKering is our way of reconnecting with what makes Kering unique, while embracing what luxury is becoming. True Luxury is our mission, and Next Luxury is our horizon. This plan brings the two together with the agility of a challenger, a renewed focus on desirability and a stronger commitment to execution,” de Meo said in Thursday’s statement.
The former Renault chief, who took over the ailing luxury group in September, has already announced a number of measures aimed at cutting its debt and streamlining its operations.
These include the creation of two new centers of excellence for industry and client; the appointment of a chief digital, AI and IT officer, and the creation of a dedicated unit for high jewelry.
Kering plans to close at least 100 more stores this year as it continues to trim loss-making or underperforming locations as part of the radical restructuring, aimed at returning all its brands – excluding McQueen – to growth and improve margins.
The presentation is expected to provide more clarity on the turnaround effort at its star brand Gucci, now led by former Balenciaga creative director Demna.
The group’s lackluster first-quarter results have put added pressure on de Meo. Revenues declined 6.4 percent in reported terms to 3.57 billion euros in the first three months of 2026, sending its shares down by 9.3 percent on Wednesday.
By comparison, revenues at Hermès International were down 1.4 percent during the period, while LVMH Moët Hennessy Louis Vuitton reported sales in its key fashion and leather goods division fell by 9 percent.
Equity analysts were disappointed with Gucci’s performance, with reported sales down 14.3 percent, off 8 percent in organic terms.
It was the 11th consecutive quarter of negative organic growth “with only modest improvement on a two‑year stack versus 4Q, as uplift from the new creative direction is taking longer to materialize than investors initially expected,” TD Cowen’s Oliver Chen wrote in a note Wednesday.
“We would prefer to see more consistent momentum across regions, particularly in China, alongside clearer evidence of product‑led acceleration before turning more constructive, all else equal,” he added.
Chen is banking on the Capital Markets Day to deliver “greater clarity on the product roadmap and upcoming launches, how the new creative direction is translating into merchandising discipline, progress on store rationalization, and a more explicit framework for addressing the divergence between the U.S. and China.”
As reported, Gucci sales improved 8 percent in North America but sank 12 percent in Europe and 14 percent in Asia-Pacific, according to TD Cowen.
Bernstein analyst Luca Solca said delivering top-line growth ambitions at Gucci now seems like a tall order, ramping up expectations for the Florence information day.
“Unless management (or, perhaps, President Trump) somehow pulls a large rabbit out of the hat later this week, we believe the reality, and difficulty, of brand turnarounds will start to set in, leaving Kering at risk of taking another swing on the brand turnaround yo-yo,” Solca wrote in a note Wednesday.
“Luxury brand turnarounds have become more complex, slower, costlier, and far less public‑market‑friendly than in the past,” agreed Citi analyst Thomas Chauvet.
Indeed, during the Kering analyst call on Tuesday, analysts proved themselves extremely well-versed on the Gucci collections Demna has so far delivered, dubbed “La Famiglia,” “The Lookbook Collection” and “Primavera” – and were eager to learn delivery dates that might possibly lift the weak numbers.
