Kering SA (EU:KER) slipped more than 3% on Wednesday after a Reuters report revealed that CEO Luca de Meo has instructed top executives to scale back the company’s retail footprint, lessen its dependence on Gucci, and deepen collaboration across the group, according to an internal memo reviewed by the news agency.
The memo — described as a condensed version of a broader strategic document titled “ReconKering” — sheds new light on de Meo’s early plans to revitalize the company. The details emerge less than a month after Kering agreed to sell its beauty division to L’Oréal (EU:OR) for €4.7 billion.
Reuters added that the company intends to bolster liquidity and sharpen its focus on core luxury fashion brands.
In the document, de Meo wrote that Kering “remains humble” and stated his goal for the company to become “the undisputed challenger in luxury” within the next five to ten years, according to the report.
Kering has been grappling with a steep sales drop at Gucci — its primary profit engine — while debt has increased following several acquisitions.
As reported by Reuters, de Meo set an 18-month timeline for returning all brands to growth and estimated it would take around three years to restore what he referred to as “top financial performance.” The memo also notes that Kering, which has already shut down 55 stores over the past year, must continue trimming its retail network and re-evaluate its pricing architecture and product assortment after several years of aggressive price hikes.
Reuters said de Meo cautioned against an “overdependency” on Gucci and argued that the group needs to speed up the development of Saint Laurent, Bottega Veneta and Balenciaga.
The document reportedly says that the jewelry division — which has struggled to scale in competition with LVMH (EU:MC) and Richemont (BIT:1CFR) — should seek stronger synergies within the group.
Brioni was listed among the brands with development potential, though Reuters noted that both Brioni and Alexander McQueen have been the subject of divestment rumors.
In a statement, Kering said de Meo laid out the foundations of his strategic direction when he took charge in September, and that this guidance has been shared internally. According to the report, the company intends to present its full strategic roadmap to investors next spring.
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