Luxury sector restructures to balance ahead of an uncertain outlook

European luxury groups including LVMH, Kering and Richemont are reviewing brand portfolios, organizational structures and store networks amid tighter oversight from senior executives and investors. After more than two years of downturn, the industry’s long-running growth model is showing strain, prompting renewed scrutiny of underperforming brands, governance and sprawling retail footprints aimed at improving operational efficiency and cutting costs.

LVMH tightens spending and governance

LVMH, which owns more than 80 brands, is tightening spending as performance at core brands stalls. The company’s CEO succession plan for Bernard Arnault is also increasing oversight of the group’s broad operations. Arnault has refreshed the top team, appointing Stéphane Bianchi as CEO and Cécile Cabanis as CFO, with analysts describing a more disciplined governance approach.

LVMH has restructured management in its Fashion & Beauty divisions, where brands including Marc Jacobs, Make Up For Ever and Fenty Beauty are under review. The group has expanded the authorities of Louis Vuitton CEO Pietro Beccari and Parfums Christian Dior CEO Véronique Courtois.

In wine and spirits, which is facing difficulties, the division is under close scrutiny. Analysts expect a selective streamlining led by former CFO Jean-Jacques Guiony and Alexandre Arnault, Bernard Arnault’s son.

Kering prepares a broader overhaul and reduces stores

Kering is expected to undergo a stronger overhaul. CEO Luca de Meo told investors, “We can review everything from the beginning.” Early in his tenure, he sold his stake in a junior beauty venture, and the company is now rechecking its portfolio and organizational structure to optimize resource allocation.

More recently, Kering announced plans to bring jewelry brands and the supply chain under the operational leadership of COO Jean-Marc Duplaix. The group is establishing two “centers of excellence”: one for manufacturing and supply chain, and another covering product, pricing strategy, marketing and data. Kering said it is recruiting senior leaders from automotive and e-commerce to run these units.

The company is also trimming its store footprint. Kering plans to close about 100 stores this year, mainly Gucci stores in Asia, after cutting 75 stores last year. The shift from aggressive expansion toward upgrading a smaller set of stores is described as an industry-wide trend.

Richemont balances selective change with watch market pressure

Richemont faces less pressure for large-scale changes, supported by the success of Cartier and Van Cleef & Arpels. Jewelry remains a strategic priority, while the watches division—affected by the broader Swiss watch sector—has shown growth after two years of decline. However, the pace is uneven due to conflict in the Middle East.

Richemont’s mid-range watch segment faces competition from Rolex, Patek Philippe and Audemars Piguet, with IWC and Jaeger-LeCoultre facing the sharpest pressure. The group has also divested Baume & Mercier to Damiani.