Paris-based luxury titan Kering plans to protect its declining profit margins by shutting down approximately 200 retail locations globally by 2026-end. This structural realignment follows a challenging FY25, where the group reported a 13 per cent decline in total revenues to €14.7 billion. The move highlights a decisive shift from aggressive physical expansion to a leaner, higher-margin operational model as ‘quiet luxury’ trends and cautious consumer spending dampen demand for heritage labels.
Regional rationalization and the Gucci reset
The closure strategy disproportionately impacts Gucci, Kering’s flagship brand, which experienced a 22 per cent revenue nosedive in 2025. Following a net reduction of 75 stores last year, the group is scheduled to terminate 100 more leases in 2026, with 40 per cent of these cuts concentrated in the Asia-Pacific region. Luca Solca, Senior Analyst noted during a February 19, 2026, earnings call, these results ‘mark the bottom’ of the downturn. By streamlining its network, Kering successfully reduced inventory by 8 per cent in 2025, a critical step to preserve brand exclusivity and prevent the dilutive effects of excessive markdowns.
Strategic liquidity and category diversification
To navigate what McKinsey & Company describes as a ‘year of dislocation’ for fashion, Kering is reallocating capital toward more resilient categories. In a significant move, the group finalized the $4.7 billion sale of its beauty division to L'Oréal, which grants a 50-year exclusive licensing agreement expected to activate in the first half of 2026. This liquidity injection will support a major push into high-end jewelry - a category that has withstood the slump better than leather goods. Through acquisitions like Raselli Farco, Kering aims to leverage its new ‘execution-first’ roadmap to return to profitable growth by FY27.
Kering is a global luxury powerhouse managing iconic Houses including Gucci, Saint Laurent, and Balenciaga. Specializing in leather goods, apparel, and jewelry, the Paris-based group is currently executing a creative turnaround to reverse a 54 per cent three-year stock erosion. Under Luca de Meo, CEO, it targets margin recovery through leaner operations.
