A Tough Love Letter from the Top
What happens when one star child carries the whole family? That’s the question hanging over Kering right now. In a frank internal memo sent in October, the group’s chief executive Luca de Meo basically told everyone inside the company: we’re too hooked on Gucci, and the store network has grown too fat. The plan he laid out – an 18-month overhaul nicknamed “ReconKering” – is meant to fix the balance sheet, clean house, and get every brand growing again on its own feet.
People inside Kering say the memo felt like a splash of cold water. After years of Gucci paying most of the bills, the truth hurts.
How Bad Are the Numbers, Really?
Let’s look at the scoreboard for the first nine months of 2025. Sales, measured on a like-for-like basis (meaning apples-to-apples, no currency tricks), dropped 12 percent to around €11 billion. Costs kept climbing at the same time the company poured money into new projects. Result? Profits got squeezed hard and net debt shot higher than anyone liked.
Gucci still brings in roughly half of total revenue and – even more shocking – about two-thirds of the group’s operating profit. When China’s luxury boom suddenly slowed down and the brand went through yet another creative director change, the cracks showed fast. Too many logos, too much exposure to one market, too little fresh excitement – that’s the short version.
Why Does One Brand Matter So Much?
Think of Kering like a family with several kids. Saint Laurent and Balenciaga are doing okay in school. Bottega Veneta is the quiet one starting to shine. Alexander McQueen brings the drama. Boucheron and Pomellato sell beautiful jewelry. But Gucci has been the golden child bringing home the biggest paycheck for years. When that kid stumbles, the whole house feels it.
What Exactly Is “ReconKering” Going to Do?
The memo lists a long to-do list, and none of it sounds fun:
- Every single brand gets a full review of prices and products. Are handbags too expensive for what they offer now? Are sneakers still cool? Time to find out.
- Marketing budgets will shrink – no more blank checks for giant billboards and celebrity parties.
- Old inventory has to go, even if it means big discounts.
- Store leases come up for hard talks. Some shops will close. Others will shrink or move to cheaper streets.
- The retail network overall gets thinner. Fewer doors, but hopefully better ones.
Two famous consulting firms, Bain & Company and Boston Consulting Group, are digging through the numbers brand by brand. Word is Alexander McQueen will be one of the first to feel the knife – maybe fewer runway shows, maybe fewer stores, maybe both.
When the news leaked, Kering shares dropped 3.2 percent in a single day. Investors hate surprises, even when the surprise is “we’re finally fixing things.”
Is This Just About Gucci, or Is Luxury Itself Changing?
Good question. Luxury isn’t dying, but the rules have shifted. Customers who used to line up for the newest “it” bag now hunt for quiet luxury, timeless pieces, or second-hand treasures. TikTok kids want something different than the tourists who once flooded outlets in Europe. Add in higher interest rates, a slower Chinese economy, and travelers spending less on shopping trips, and you see why even the giants feel shaky.
Kering isn’t alone. LVMH has warned about softer demand. Richemont posted weak numbers too. But Kering’s Gucci problem is bigger than most because the brand grew so huge so fast.
Can Gucci Find Its Magic Again?
Many people still remember when Alessandro Michele turned Gucci into the hottest name on the planet – eclectic, colorful, a little weird, totally irresistible. Sales doubled in just a few years. Then the magic faded. Sabato De Sarno, the new designer, is pushing a cleaner, sexier look. Early signs are mixed. Some love it. Some miss the old maximalist vibe. Either way, the brand can’t keep leaning on past glory.
What Happens Next for the Other Brands?
This is the part that could actually be exciting. Saint Laurent has been steady under Anthony Vaccarello – think sharp tailoring and sky-high heels. Bottega Veneta, with its woven leather bags, is winning fans who hate logos. If Kering gives those houses more room to breathe (and more money to play with), they could pick up some of the weight Gucci used to carry alone.
Smaller names like Brioni suits or Qeelin jewelry might never be giants, but every little bit helps when the portfolio feels more balanced.
The Clock Is Ticking
Eighteen months isn’t forever. By mid-2027 we’ll know if “ReconKering” worked. Stores will close, jobs will sadly be lost, prices might shift, collections will look different. Luca de Meo is betting that a leaner, less Gucci-dependent Kering will come out stronger on the other side.
Investors seem nervous – who wouldn’t be? But sometimes you have to break a few things to build something that lasts. Luxury shoppers keep evolving, and big groups have to evolve with them, even when it hurts.
