Gucci slump, Valentino risks await Renault's de Meo at Kering
PARIS, France: Luxury group Kering's decision to tap Luca de Meo as its next chief is being seen as a daring but necessary attempt to halt a dramatic decline in fortunes at Gucci, the once high-flying French conglomerate.
Sources said Francois-Henri Pinault, who has led the group since 2005, is expected to hand over operational reins to the current Renault CEO. The move comes after years of underperformance at Kering's flagship brand, Gucci, and ballooning debt from aggressive acquisitions.
De Meo's track record in reviving Renault has impressed investors, but many acknowledge that restoring Kering's shine — especially Gucci's — will be an even more formidable challenge.
"It's a bold move ... We now have a CEO (de Meo) who is a great professional," said Ariane Hayate, European equity fund manager at Edmond de Rothschild. "There's now a real willingness by Francois-Henri Pinault to take a step back after years of underperformance."
Kering's shares surged more than 12 percent this week, and they are on track for their most significant daily gain since 2008.
Analysts and investors say the appointment hints at deeper troubles across Kering's portfolio — beyond Gucci — and signals the company's intent to take drastic action. One large European investor said the group's problems "are bigger than perceived from the outside."
De Meo is likely to accelerate Kering's cost-cutting plans, which include store closures, layoffs, and real estate sales. These plans aim to reduce its net debt of 10 billion euros (US$11.6 billion).
Another pressing task will be steering the group's acquisition of the remaining 70 percent of Valentino. Kering bought 30 percent of the brand in 2023 for $1.9 billion, with an option to purchase the rest in 2028 — or potentially as soon as May 2025, depending on deal clauses.
"Coming from outside the industry, de Meo's learning curve is going to be super steep, but at the negotiating table, he could do well," said one person familiar with Valentino.
De Meo's biggest test, however, remains Gucci, which has faltered since designer Alessandro Michele's exit in 2022. Investor hopes were dented further with the appointment of Balenciaga's Demna as creative director.
Despite his lack of luxury sector experience, de Meo joins a list of high-profile cross-industry leaders who have successfully steered fashion giants. Robert Polet, Leena Nair, Benedetto Vigna, and Sergio Marchionne all made similar jumps — and thrived.
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