As of February 14, 2026, French luxury titan Kering is executing a decisive strategic retreat to reset its financial foundations. Following a grueling fiscal year where revenue plummeted 13 per cent to €14.7 billion, the Group has finalized a landmark €4 billion sale of its beauty division, Kering Beauté, to L’Oréal. Encompassing the prestige fragrance house Creed and 50-year licensing rights for brands like Bottega Veneta, this divestment signals a shift away from high-stakes internal diversification toward a more agile, capital-light licensing model designed to weather current macroeconomic volatility.
Navigating the Gucci slowdown
The Group’s primary challenge remains the revitalization of its flagship, Gucci, which saw sales erode by 22 per cent in 2025. Fueled largely by softening demand in the Asia-Pacific region and a broader cooling of the ‘logo-mania’ trend, this decline dragged the Group's recurring operating margin down to 11.1 per cent from 14.5 per cent the previous year. However, a sequential improvement in Q4 - where Gucci's comparable sales decline narrowed to 10 per cent - suggests that the ‘La Famiglia’ collection and a move toward higher-end, ‘quiet luxury’ leather goods are beginning to resonate with affluent consumers.
Deleveraging and the 2026 roadmap
Under the stewardship of Luca de Meo, CEO Kering has prioritized balance sheet health over aggressive expansion. The L’Oréal transaction and strategic real estate disposals in Paris and New York have successfully slashed net debt by €2.5 billion, bringing it down to €8 billion. Looking ahead, the company has scheduled a Capital Markets Day for April 16, 2026, where it will unveil a comprehensive roadmap to reignite brand desirability and enhance operational efficiency. 2025 was the turning point we needed, de Meo noted, emphasizing a fighting spirit aimed at returning to growth and margin improvement by year-end.
Kering manages a portfolio of iconic houses including Gucci, Saint Laurent, and Balenciaga. While historically denim and leather-focused, the Group is currently pivoting toward high-margin ‘soft luxury’ and high jewelry (e.g., Boucheron). Its 2026 strategy focuses on cost discipline and leveraging AI for digital personalization to capture 20 per cent of sales through e-commerce.
