By Mimosa Spencer and Silvia Aloisi
PARIS (Reuters) -Kering shares rose more than 6% on Wednesday as investors cheered news of a major management reshuffle at the luxury group, aimed at reviving sales at star label Gucci.
Gucci has lagged rivals LVMH and Hermes in recent years, struggling to keep pace with their rebound from the impact of the pandemic.
Kering announced late on Tuesday that Marco Bizzarri, who had led Gucci since 2015, will leave the company in September.
It named managing director Jean-Francois Palus – the right hand man of Kering billionaire boss Francois-Henri Pinault – as Gucci’s new CEO and president for a transitional period.
Rising star Francesca Bellettini, who has run fast-growing fashion label Yves Saint Laurent since 2013, has been named Kering’s deputy CEO in charge of brand development while group finance chief Jean-Marc Duplaix has been appointed as Kering deputy CEO in charge of operations and finance.
The moves are part of an attempt to steer a new course for Gucci, which accounts for half of Kering’s sales and almost two-thirds of its operating profit.
Analysts said the changes were positive, though most did not expect any turnaround to bear fruit soon.
“The change of CEO at Gucci risks further prolonging the current transition phase of the brand, though it also shows the commitment of the group to go for a more decisive and effective relaunch, tightening the grip on the brand,” analysts at Akros said.
Between 2015 and 2019 Gucci became one of the world’s fastest growing brands, doubling sales to just under 10 billion euros under the leadership of Bizzarri and designer Alessandro Michele, whose gender-fluid and eccentric style were a huge hit with young shoppers in China.
But since then growth has been tapering off, just as LVMH’s Louis Vuitton gained market share thanks also to hefty marketing spending.
After Michele left Gucci in November, rumours had been swirling on Bizzarri’s fate, since the pair had worked hand-in-hand for years.
Some sources said at the time however that changing both CEO and designer in one go would have destabilised Gucci further.
The challenge for Gucci now is not to lose any further ground.
Michele’s successor, Sabato De Sarno, previously fashion director of men’s and women’s collections at Valentino, will show his first collection for Gucci in September – meaning his designs won’t hit the stores before late 2023 or early 2024.
Analysts at Exane-BNP Paribas said Gucci’s new leadership may need to sacrifice short term margins to support De Sarno’s new products, noting competitors LVMH and Hermes are expected to spend 15-20% more in operational expenses this year compared to 2022.
Kering reports first-half earnings on July 27.
(Reporting by Mimosa Spencer and Silvia Aloisi;editing by Sudip Kar-Gupta and Emma Rumney)
