- Kering unveils new strategy to revive the Gucci brand after a year-long slump.
- Company aims to double profits, announced at its Capital Markets Day.
- CEO Luca de Meo states the previous business model is "no longer effective."
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Kering targets doubling profits in new Gucci turnaround plan
Kering announced an ambitious new strategy on April 16 to double company profits and revive its flagship Gucci brand after a year-long slump.
"In a nutshell, a model that worked for a decade, is no longer effective for us," CEO Luca de Meo said during the company's Capital Markets Day in Florence.
The plan, unveiled to investors, focuses on a comprehensive turnaround for the Gucci brand. Specific financial details and the timeframe for achieving the profit-doubling goal were not immediately disclosed by the company.
The announcement is a critical test for de Meo's leadership. Kering's stock performance now hinges on whether investors believe the new strategy is credible enough to reverse the recent decline and close the performance gap with rival LVMH.
The strategy announcement follows a difficult year for the French luxury group, which has seen sales at Gucci, its main profit engine, steadily decline. The new plan is expected to involve significant investment in marketing, retail, and product innovation to re-energize the iconic brand.
Market reaction will be a key indicator of the plan's reception. A positive response could lead to a re-rating of Kering's stock, while skepticism about the plan's feasibility could result in further pressure on the share price.
This move signals a major strategic shift for Kering as it confronts slowing growth. Investors will be closely watching the company's upcoming quarterly reports for early signs of the new strategy's effectiveness.
This article is for informational purposes only and does not constitute investment advice.
