Kering, parent company of Gucci, has surprised the luxury industry by staging a revival driven not by creativity but by operational efficiency.
Since Luca de Meo, formerly of Renault, took over as CEO last September, Kering’s stock has risen about 20%, outperforming rival LVMH. His turnaround resembles strategies used in mainstream retail, such as Tesco, focusing on cost‑cutting and balance sheet repair.
Cost Cutting and Store Closures Boost Gucci’s Margins
De Meo sold Kering’s beauty brands to L’Oréal for €4bn, renegotiated Valentino obligations, and closed underperforming stores. This allowed Gucci to reduce prices on some products — Bernstein analysts noted the Mercato Tote Bag dropped 20–25% in May — while still improving operating margins.
Critics argue efficiency has limits: luxury depends on exclusivity and desirability, not supermarket‑style pricing. Yet, in the short term, affordable luxury is attracting new customers priced out of ultra‑premium brands.
Companies like Tapestry, owner of Coach, now trade at similar earnings multiples to LVMH, reflecting investor confidence in this segment.
Gucci, under art director Demna, will continue working to reclaim higher price points. But for now, Kering’s cost‑conscious approach is seen as avant‑garde in an industry that usually prizes artistry over efficiency.
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