A woman seen wearing a Gucci belt and bag during Paris Fashion Week in September 2018
Christian Verig | getty images
Kering It said on Thursday it aims to double profitability and revive its flagship brand Gucci as it announced its long-awaited strategy to get the company back on track after a year-long luxury slump that has hit it harder than its rivals.
CEO Luca Di Meo announced the strategy seven months after taking the reins, during which time investors have grown optimistic that he will be able to turn around the legacy group.
“In short, a model that worked for a decade is no longer effective for us,” he said during the company’s Capital Markets Day in Florence on Thursday. “Growth will first come from gaining share, restoring pricing power and executing better than our competitors.”
Shares fell 2% early Thursday.
The strategy, called “reconquering”, involves more than doubling the company’s 2025 recurring operating margin to 11.1%, while increasing its return on capital employed to more than 20% over the medium term.
Kering aims to refurbish or relocate two-thirds of its Gucci store network, reduce sales space by 20% and outlets by a third, as well as reduce inventory by 1 billion euros ($1.18 billion) over the next 12 months.
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