Kering Reboots Gucci with New CD
Luxury group Kering is making a high-stakes bet to turn around its flagship brand, Gucci, with the appointment of Demna as its new creative director. The first show in Milan unveiled a decisive strategic shift aimed at regaining momentum. Such a major brand pivot could lead to SKU rationalization and inventory cycles that spill into the off-price channel, particularly for beauty and licensed goods.
Demna's appointment follows a period of significant turbulence for Gucci, which saw revenues decline from €10.5 billion in 2022 to €7.7 billion in 2024. The brand's previous creative director, Alessandro Michele, had nearly tripled revenue to €9.7 billion in 2021 before his departure in 2022 amidst slowing growth. The new creative direction comes as parent company Kering undertakes an 18-month restructuring program dubbed "ReconKering". The group-wide plan aims to address its €10B debt, streamline operations, and reduce its heavy reliance on Gucci, which accounts for about half of its sales. Demna is known for his disruptive, streetwear-infused aesthetic and commercial success, having grown Balenciaga's revenues from an estimated $390 million to nearly $2 billion during his decade-long tenure. Kering leadership cited Demna's "profound understanding of contemporary culture" as a key reason for his appointment, aiming to "reignite Gucci's creative energy". This strategic pivot will directly impact Gucci's beauty and fragrance lines, a category licensed to Coty through 2028 that generates approximately $600 million in annual retail sales. Kering recently sold its beauty division, including the future rights for Gucci, to L'Oréal in a €4 billion deal, and an earlier transition of the license is reportedly under discussion. Any resulting SKU rationalization of the beauty and licensed goods portfolio could create a significant supply of discontinued products for the off-price channel. TJX and Marshalls already carry Gucci accessories, jewelry, and bags, often sourced from the brand's authorized stockists.
