Kering bets on Renault boss Luca de Meo to revive Gucci
Francois-Henri Pinault, the billionaire heir who has headed up the French fashion house Kering Group for the past 20 years, has picked the CEO of automaker Renault to be his successor. The stock market's reaction? That's gucci.
Shares of Kering jumped Monday after reports trickled out beginning Sunday that Kering planned to tap Luca de Meo as its new CEO. The stock closed 13.5% higher.
The Paris-based company confirmed the news in a statement on Monday, indicating that de Meo will take the helm of the struggling fashion house as it 'enters a new phase of development.' Pinault will stay on as chairman of the board of directors after de Meo takes the helm in September.
Pinault said in the statement that he first met de Meo a couple years ago when he 'launched a reflection on the evolution' of the company's governance. 'His experience at the helm of an international listed group, his sharp understanding of brands, and his sense of a strong and respectful corporate culture convinced me that he is the leader I was looking for to bring a new vision and steer this chapter in our Group's history.'
The big jump in Kering shares suggests investors are at least hopeful about Kering's future, and Bernstein analysts noted that brand management and marketing are de Meo's forte, as reported by CNBC. Kering shares have fallen more than 72% in the past four years as the company has struggled to convince customers—and investors—of its appeal.
Gucci's Struggles
Much of Kering's problem rests with Gucci, the group's biggest brand by far, accounting for 44% of revenue in 2024. Gucci has been dragging down the rest of the company: In the first quarter, Gucci's sales fell 25%, while Kering's fell 14%.
Gucci has fallen out of fashion among consumers, and particularly in China and the broader Asia-Pacific region. The brand closed two stores in Shanghai earlier this year, while other brands have gained traction among consumers there—and elsewhere.
Attempts to breathe some new life into the brand—such as the March announcement of Demna as Gucci's new creative director following a decade-long stint at Balenciaga—didn't assuage investors. And consumers looking for a handbag that's nostalgic to Gucci's golden years might find a more attractive option with an independent collection of handbags by Alexandra Gucci Zarini, an heir to the Gucci family,
While de Meo had a successful tenure at Renault—during which time the stock jumped nearly 90%—he faces a difficult road in his new role.
'De Meo has a titanic challenge ahead of him,' Luca Solca, analyst at Bernstein, told The Wall Street Journal.
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