Why Kering CEO Luca de Meo is Moving Focus Away From Gucci

Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen - Kering’s list of brands and influence over the fashion industry goes on.

But despite the big names under its belt, Kering has been navigating a double-digit sales decline throughout 2025, largely down to its flagship label Gucci declining sales and debt through acquisitions.

Kering CEO Luca de Meo is taking action, saying that the company’s return to growth will require reducing its reliance on Gucci, further scaling back its store network and chasing more synergies, according to a memo seen by Reuters.

The document was sent to senior staff and offers a detailed overview of Luca’s vision for the French multinational luxury company.

According to Reuters, the CEO says in the note “we remain humble”, adding that his ambition is to “become the undisputed challenger in luxury”.

Putting a timeline to his strategy, Luca says that it will take 18 months to get growth back on track and adds that gaining “top financial performance” will take three years.

Kering has closed 55 stores in the past year, but the Chief said it needs to further downsize its retail network and rethink its price positioning after years of price increases.

Strategic partnerships

This memo comes just a month after Kering announced on 19 October a strategic partnership with L’Oréal aimed at tackling the luxury group’s debt and developing loreal’s status in the luxury market.

In a deal worth €4bn (US$4.66bn), Kering’s beauty business would be handed over to  L’Oréal, signalling a long-term strategic partnership in luxury beauty and wellness.

This means that the French beauty giant L’Oréal is taking ownership of Kering’s Creed fragrance line and the right to develop products under Kering’s fashion labels.

When it comes to Gucci, the licence to make this brand’s beauty products will commence after its current licence with Coty expires, predicted in 2028.

Discussing the partnership at the time, Luca said: “This strategic alliance makes a decisive step for Kering.

“Joining forces with the global leader in beauty, we will accelerate the development of fragrance and cosmetics for our major Houses, allowing them to achieve scale in this category and unlock their immense long-term potential, as did Yves Saint Laurent Beauté under L’Oréal’s stewardship.”

L’Oréal Groupe's CEO, Nicolas Hieronimus, said the strategic partnership will “further solidify our position as the world’s number one luxury beauty company and allows us to explore new avenues in wellness together”.

Gucci’s financial revival

Sales at the Italian brand have been dropping year-on-year since the third-quarter of 2023.

In the third quarter of 2025, Gucci sales dropped by 14% on a comparable basis, to €1.3bn (US$1.5bn), while Kering’s overall revenue decreased by 5% on a comparable basis to €3.4bn (US$3.9bn).

This decline at the flagship brand was due to a 13% fall in directly operated store sales and a 25% drop in wholesale revenue.

However, this represents an improvement from the second quarter of 2025, which saw sales decrease 25% as well as reduced profits.

Kering has taken steps to revive Gucci in the past with the appointment of Francesca Belletini as CEO of the brand in September, formerly Deputy-CEO in charge of brand development at Kering and one-time CEO of Yves Saint Laurent.

Luca said of her appointment: “Gucci, as the flagship of our Group, deserves the sharpest focus, and Francesca - one of the most seasoned and respected professionals in our industry - will bring the leadership and flawless execution needed to restore the brand to its rightful place.”

Other attempts of revival have been made, including with former CEO François-Henri Pinault outlining “critical decisions to raise the impact of our communications, sharpen our product strategies and heighten the quality of our brand distribution, all in the respect of the creative heritage that distinguishes our brands."

To cut back its reliance on Gucci, Luca says in the memo that Kering will focus on developing its Saint Laurent, Bottega Veneta and Balenciaga brands. He also cited suit maker Brioni and fashion label Alexander McQueen.