Kering's Luxury Comeback Hints at 2026 Resurgence

• Kering experiences a sales decline in 2025 but anticipates growth and margin improvements in 2026.
• Strategic actions, including selling the beauty segment and focusing on core fashion business, are underway to reignite desirability.
• New CEO Luca de Meo's turnaround plan and entry into the wellness segment are keenly watched by investors.
• Gucci's performance remains critical, with expectations for a return to growth in fiscal year 2026.

Eh, What's Up Doc? Kering's Sales Dip

Well, folks, seems like Kering, that fancy-schmancy company with all the designer duds, had a bit of a rough patch. They're talking about a sales decline and all that jazz. "Of course, you realize, this means war," as I always say when things don't go my way. But, don't you worry your cotton tails, they're not throwing in the towel just yet. They're planning a comeback, and that's where things get interesting.

Gucci, Gucci, Goo! Flagship Troubles

Now, their main squeeze, Gucci, wasn't exactly doing the jitterbug either. A 10% decline, they said. Ouch. But hold your horses, it seems there is a silver lining. The company is trying to get their reputation back on track, which is great news. Seems like Target Restructures Workforce Amidst Shifting Retail Landscape shares similar recovery plans when dealing with shifting landscapes. Their new artistic director Demna, wants to launch a new collection called "La Famiglia". It seems like they are focusing on family values, maybe they want to attract more customers.

The De Meo Maneuver: An Outsider's Gambit

Enter Luca de Meo, the new top carrot at Kering. Fresh from the world of automobiles, he's got a plan to steer this ship back on course. Now, what's an auto guy doing in the land of luxury? "A likely story," you might say, but maybe he's got the secret sauce to turn things around. He previously turned around a struggling automaker, and his experience might be useful here as well.

Riding the Stock Market Rollercoaster

Despite the sales slump, the stock market did a bit of a jig. Shares jumped up, giving a boost to other fancy brands too. But remember, folks, it's a rollercoaster. Up one minute, down the next. You gotta keep your eyes peeled and your wits about you. One of De Meo's actions has been deleveraging the company's balance sheet, and selling its beauty segment to L'Oreal for 4 billion euros in an attempt to tackle the group's high net debt and focus on its core fashion business. "Our objective is clear, reignite desirability and prepare the next cycle of growth, house by house, product by product, client by client," De Meo said.

Wellness? What's All the Fuss About?

Kering is also thinking about hopping into the wellness and longevity game. Seems everyone wants to live forever these days. Well, I'm all ears, what could go wrong? The new CEO also noted Kering is preparing to enter the wellness and longevity segment, "a space where we want to play and where we know value and growth will be created," and added that the company's jewelry strategy will be further unveiled in April. Sounds promising if you ask me.

The 2026 Carrot: A Glimmer of Hope

So, what's the bottom line, doc? Kering thinks they'll be back in the green by 2026. They're keeping the details under wraps for now, but they'll spill the beans at their Capital Markets Day in April. Until then, we'll just have to wait and see if they can pull a rabbit out of their hat. As Kering's are gradually reducing pressures, investors are keen to hear more from De Meo first impressions, "with considerable cost savings potential, an inevitable area of focus," the analyst added. That's all folks.