This document, obtained by Reuters, summarizes a more comprehensive memo entitled "ReconKering", as recently sent to senior executives, and is the first clear presentation of de Meo's strategy. It comes less than a month after the sale of the group's beauty division to L'Oréal for €4.7bn, a move designed to free up cash and refocus Kering on its core business: luxury fashion. The tone adopted is both lucid and determined.
"We remain humble," de Meo writes, while setting the goal of making Kering "the undisputed challenger in the luxury sector" in the next five to ten years. The group, long perceived as a credible rival to LVMH, now faces a double-digit drop in Gucci sales, while carrying debt related to its recent acquisitions.
Three years to return to high-level performance
The CEO has set itself a target of 18 months to relaunch all the brands in its portfolio, while estimating that it will take three years to return to high-level financial performance. The group, which has already closed 55 stores in one year, plans to continue streamlining its network, review its pricing strategy and expand its offering. It is also counting on the growth of Saint Laurent, Bottega Veneta and Balenciaga to reduce its over-dependence on Gucci, while jewelry will have to rely on internal synergies. Finally, De Meo cites the Brioni tailor and the loss-making Alexander McQueen label amongst brands that have potential, although they are often mentioned as candidates for sale.
During trading on November 19, the market seemed to find the recovery time a little long... The stock fell by 3.4% to just under €300. However, everyone knows that there is no magic formula in the luxury industry, where value is often proportional to the length of heritage.
