ReconKering: Luca de Meo’s Vision for “Next Luxury”
Speaking from the stage at the Leopolda yesterday, Luca de Meo said he was ready to “rebuild” Kering, and the very title of the Capital Markets Day, ReconKering, spells it out in black and white. “No promises, just certainties,” he emphasized yesterday as he introduced the lengthy presentation—lasting over three hours—to analysts and the press. A presentation based on a premise: the world of luxury has changed, consumption has changed, and consequently, even a giant like Kering needs to start anew from a sense of continuity, but with a focus on “next luxury.”
The alliance of art and science
And this is precisely where de Meo’s unique background comes into play—namely, his career path originating from sectors outside the luxury world. The executive himself highlighted this during a meeting with the press following the presentation. “Luxury? People want to defend this kind of culture. And so, for someone like me—an outsider—entering the system, the easiest way to dismiss me is to say, ‘Ah, but that guy was cutting costs; he only talked about efficiency.’ That’s not true. You’re underestimating the level of intellectual sophistication with which I analyze this situation.”
“I know this is a creative industry,” he continues. “It’s creative, and at the same time, it’s an industry. And at a certain company size, you have to combine art—which is the top priority—with science. And what I can bring to the table first and foremost, obviously, because I come from a different world, is that scientific component.”
The partnership with Valentino: caution and complementarity
During the interview with the international press, de Meo addressed several key points of the French giant’s strategy, starting with the relationship with Valentino, a brand with which he renegotiated the acquisition agreement in September, pushing the completion of the deal back to 2028–2029. “We are minority shareholders in Valentino. We participate in governance. We have, in a way, an understanding of what’s going on there,” he explained. “Personally, and along with the entire team, we have a great deal of admiration and respect for what Riccardo Bellini is accomplishing as CEO. He works really hard; I think he’s doing the right thing.”
Looking ahead, de Meo remains positive but cautious: “What I can do at this stage is try to imagine, to anticipate where Riccardo is taking the brand and to see if it would fit into Kering’s portfolio. I think it would. It’s a wonderful brand, the essence of luxury. However, I’m also concerned about brand synergy. I think Kering has enough brands to manage them as a portfolio—neither too many nor too few. The next step, since this is a major player—a brand with over a billion in revenue—is to ensure that it adds something to the equation. And I believe the potential is there, when you look at the numbers. But until then, we can only hope that the majority team will continue to do a good job.”
Back to basics for Alexander McQueen and a reorganization of smaller brands
The story is different for McQueen, a brand for which, as anticipated yesterday, a significant reduction in the retail network is planned. “I think that in the case of McQueen,” explains de Meo, “one of Kering’s problems was that we treated all brands the same way, regardless of their individual nature. Take a brand like McQueen: by nature, it’s a niche, edgy, avant-garde brand. Then we started opening stores and making accessible products. That’s not what McQueen is about. So, the first thing to do is go back to its roots, to what it used to be: formal wear, tailoring, evening gowns, and slightly unconventional accessories. Find a way to make that work, build a backbone that can support, perhaps, a relatively limited business. Ensure that McQueen becomes itself again and leverage all possible synergies with the group.”
Thus, while a return to profitability is projected for all other Kering brands, this forecast does not extend to McQueen, on which “we are working hard. However, I have no reason to part with it. ” But, in this context, de Meo broadens his reasoning to include smaller brands, for which a different structure is necessary. “Probably, when I look at the situation, I need to establish within Kering a more suitable platform to accommodate brands with less than 300 million in revenue, because we’ve been relatively poor at integrating smaller brands due to the group’s bureaucratic structure.”
Launch of “House of Wonders” for emerging brands
On the high-potential brands front, however, Kering launched a new initiative yesterday with the House of Wonders platform, dedicated to so-called high-potential emerging brands, within which the acquisition of a minority stake in the Chinese brand Icicle was announced. “For House of Wonders, the idea is to build an operational platform with a multidisciplinary team capable of welcoming a small company and giving it the opportunity to grow at twice or three times the speed it would on its own, compared to turning to a venture capital or private equity fund.”
“It’s a sort of pressure relief valve for the organization, to breathe a little oxygen and fresh air into it,” adds de Meo. “I’ve done this before, sometimes successfully, sometimes not, but it’s always very, very positive. One of the funny things is that we receive a huge number of applications, from people who write to us—to me personally—in an incredible way: they want to join the Kering project. That has never happened to me before.”
Restructuring the supply chain and suppliers
Another key issue for Kering, but more broadly for the entire luxury sector: the question of supplier management, particularly in light of recent scandals that have affected certain high-end houses. “We plan to bring production back in-house and focus on fewer suppliers,” announced de Meo. “We have 4,200—that’s too many. And I said that, for example, with HModa (with whom Kering has formed a joint venture, ed.), we are investing money in the company so that it can carry out this consolidation work for us. We’ve observed that in many other industries, there were so-called tier-one suppliers that handled precisely this consolidation: in aerospace, chemicals, automotive, etc. That hasn’t happened in luxury.”
Consequently, the executive explains, in the luxury sector, “large companies dealt directly with both small and large suppliers, always on a direct basis. That’s why in Italy, you have 600,000 people working in 60,000 companies—an average of ten people per company. How can they invest in technology? How can they invest in sustainability? How can they invest in anything? I believe we must drive this kind of transformation in a constructive way. And since we are the leading player in this country, I believe I have the role, the right, but also the duty to commit to this kind of transformation. And that is what we are doing. I think we could be seen as a kind of white knight driving this transformation. The system needs it. Coming from the outside, I see it clearly.”