Kering, the French luxury conglomerate, made a significant announcement on Monday regarding the appointment of Luca de Meo as its new chief executive. De Meo, who is credited with steering automaker Renault out of crisis, will now lead the group in its efforts to revive its flagship brand, Gucci.
The decision to bring de Meo on board is seen as a crucial step in Kering’s governance evolution, aimed at strengthening the leadership team as the company enters a new phase of development. The former Renault chief is set to officially assume his new role in September, pending shareholder approval of a restructured governance model that will separate the positions of chief executive and board chairman. Francois-Henri Pinault, the largest shareholder of the company, will continue to serve as board chairman.
Gucci, despite being a key player in generating half of Kering’s total sales, has faced challenges in recent years. The appointment of de Meo led to a surge of nearly 12 percent in Kering’s shares, indicating investor confidence in his ability to drive positive change within the company.
On the other hand, Renault’s shares experienced an 8.7 percent drop following de Meo’s announcement of his departure from the automotive sector. During his tenure at Renault, de Meo is lauded for stabilizing the company post the Carlos Ghosn scandal, accelerating its shift towards electric vehicles, and repositioning it as a more premium brand.
Despite the positive market reaction to de Meo’s appointment, long-term investors in Kering have been facing losses. The company’s shares have declined significantly, primarily due to Gucci’s struggles. Kering reported a 12 percent decrease in sales and a 64 percent drop in net profit last year.
Gucci, in particular, has been facing challenges, with a 23 percent drop in shares in 2024. The brand parted ways with its creative director earlier this year, and in an effort to revitalize the brand, Demna Gvasalia of Balenciaga was appointed as Gucci’s chief designer.
As de Meo steps into his new role at Kering, analysts have raised questions about his limited experience in the luxury sector. However, Pinault emphasized that de Meo will work alongside top experts from Kering’s luxury houses to drive the company forward.
In conclusion, de Meo’s appointment as the new chief executive of Kering marks a significant turning point for the company as it seeks to navigate through challenges and revitalize its flagship brand, Gucci. With his track record of successful turnarounds, de Meo’s leadership is expected to bring about positive changes within the organization.
