Kering names ex-Renault chief Luca de Meo as CEO
French luxury group Kering announced on Monday, June 16, that it had appointed Luca de Meo, who helped drive automaker Renault out of crisis, its new chief executive as it tries to turn around the fortunes at its struggling flagship brand Gucci. De Meo's appointment "marks a decisive step in the evolution of Kering's governance and strengthens the Group's leadership as it enters a new phase of its development," the company said in a statement.
It said de Meo would take over the reins in September after shareholders approve the change in the governing structure that will see the chief executive and board chairman roles split at the group that owns Gucci, Yves Saint Laurent, Balenciaga and other premium brands. Francois-Henri Pinault, whose family controls the holding that is the largest shareholder in Kering, will remain board chairman.
Kering has struggled to turn things around at Gucci, the Italian fashion house famous for its handbags and which accounts for half of the group's overall sales. Shares in Kering shot nearly 12% higher on reports of de Meo's imminent appointment, which was only confirmed by the company after the closing of the Paris stock exchange.
Renault shares, however, fell 8.7% following its announcement Sunday that Luca de Meo, 58, would step down on July 15 "to take on new challenges outside the automobile sector" after five years at the helm of the company.
Known as a skilled communicator and marketing expert, de Meo is credited with bringing stability to a company that was in turmoil when he took over in 2020. The automaker was reeling from more than a year of crisis in the wake of the scandal involving Carlos Ghosn, the former head of the Nissan-Renault alliance who fled Japan to avoid trial.
De Meo accelerated the group's shift to electric vehicles and pushed for an upmarket move in an effort to steer the company out of trouble. Renault also owns the Dacia and Alpine brands. The automaker managed to avoid the sales slowdown that has hit its main rivals, and has maintained its guidance for a gross operating margin of more than 7% this year.
'Kering needs to change'
Monday's jump in Kering's share price still leaves long-term investors deep in the hole.
"Kering shares have lost 28% since the beginning of the year and 78% since its peak in mid-2021, a drop largely due to the drop in its leading brand Gucci," said analysts at Bernstein bank in a note. "Kering needs to change as the group's performance continues to deteriorate," they added.
The company's sales slid 12% last year to €17.2 billion and net profit tumbled by 64% to €1.1 billion. Shares in Gucci fell by 23% in 2024, and in February it parted ways with its creative director, Italian designer Sabato De Sarno, after a collaboration that lasted two years and failed to turn things around at the fashion label known for its handbags with the double G logo.
In March, it appointed Demna Gvasalia from its Balenciaga brand as chief designer, and has also appointed new designers at Balenciaga, Yves Saint Laurent and Bottega Veneta.
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Fashion Network
an hour ago
- Fashion Network
Gucci owner Kering bets on crisis specialist de Meo to lead revival
By stepping aside to let de Meo run a luxury sector giant, Pinault has acknowledged the urgent need to address Kering's problems, including the 75% drop in its value since the summer of 2021, according to Reuters conversations with industry experts and investors. "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 confirmed in a statement on Monday it had picked de Meo as CEO and that he would start in his role in September. Pinault, who told analysts he had met de Meo only a few months earlier during the recruitment process, would retain the role of chairman. "I will be fully involved in the strategic orientation of the group as chairman," Pinault said. "But I won't step in and short circuit the new CEO in terms of priorities or key appointments." Kering's share price rose nearly 12%, its best daily performance since 2008. The group's swoop for de Meo also suggests that its problems are bigger than perceived from the outside and go beyond Gucci, said one large European investor on condition of anonymity in discussions relating to individual investments. Despite his lack of experience in the luxury sector, de Meo does bring skills that can help Kering at this critical juncture, industry players say. Having successfully managed a turnaround at Renault, he is likely to accelerate a Kering cost-cutting push that includes store closures, real estate sales and redundancies to reduce its more than 10 billion euros ($11.6 billion) of net debt, according to two industry players and one person who knows him. De Meo will also need to address Kering's planned acquisition of the 70% of fashion brand Valentino that it doesn't already own. Kering bought 30% in 2023 for $1.9 billion and intends to buy the remainder in 2028. The purchase from Qatari-backed luxury fund Mayhoola could cost a further 4 billion euros, Kering's annual report said. Options included in the original deal might force Kering to buy the other 70% as early as next May, company filings show, which could require partial payment in Kering shares, Kering finance chief Armelle Poulou said in April. "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, declining to be named owing to the sensitivity of the matter. Mayhoola, which does not have a press office, did not respond to a request for comment sent to its corporate email address. A person close to the fund described de Meo's expected arrival at Kering as good news. De Meo's most pressing challenge, however, is Gucci. The Italian label has struggled since star designer Alessandro Michele left in late 2022 and the company's recent appointment of creative director Demna from Balenciaga disappointed investors. Coming with three decades of automaking experience, de Meo may initially focus on costs, said a Kering adviser who declined to be named, while luxury sector adviser Mario Ortelli said it could be difficult for de Meo to come from a different industry and give an opinion on a creative designer. But the aforementioned cross-sector successes of Polet, Nair, Vigna and Marchionne offer hope for de Meo. Polet, who joined Gucci as CEO in 2004 after a 26-year career at Unilever, is credited with reviving the label after the departure of famed designer Tom Ford. Nair switched from Unilever to Chanel in 2022 and lifted sales to $18.7 billion in 2024 from $15.6 billion in 2021. Other cross-sector success included Ferrari boss Benedetto Vigna, who joined the supercar manufacturer from chipmaker STMicro in 2021 and led a push towards highly profitable personalised offers to clients. Another was the late Sergio Marchionne, architect of the successful Fiat-Chrysler merger and a former boss of de Meo, who joined Fiat from verification company SGS.
Fashion Network
3 hours ago
- Fashion Network
Gucci owner Kering bets on crisis specialist de Meo to lead revival
By stepping aside to let de Meo run a luxury sector giant, Pinault has acknowledged the urgent need to address Kering's problems, including the 75% drop in its value since the summer of 2021, according to Reuters conversations with industry experts and investors. "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 confirmed in a statement on Monday it had picked de Meo as CEO and that he would start in his role in September. Pinault, who told analysts he had met de Meo only a few months earlier during the recruitment process, would retain the role of chairman. "I will be fully involved in the strategic orientation of the group as chairman," Pinault said. "But I won't step in and short circuit the new CEO in terms of priorities or key appointments." Kering's share price rose nearly 12%, its best daily performance since 2008. The group's swoop for de Meo also suggests that its problems are bigger than perceived from the outside and go beyond Gucci, said one large European investor on condition of anonymity in discussions relating to individual investments. Despite his lack of experience in the luxury sector, de Meo does bring skills that can help Kering at this critical juncture, industry players say. Having successfully managed a turnaround at Renault, he is likely to accelerate a Kering cost-cutting push that includes store closures, real estate sales and redundancies to reduce its more than 10 billion euros ($11.6 billion) of net debt, according to two industry players and one person who knows him. De Meo will also need to address Kering's planned acquisition of the 70% of fashion brand Valentino that it doesn't already own. Kering bought 30% in 2023 for $1.9 billion and intends to buy the remainder in 2028. The purchase from Qatari-backed luxury fund Mayhoola could cost a further 4 billion euros, Kering's annual report said. Options included in the original deal might force Kering to buy the other 70% as early as next May, company filings show, which could require partial payment in Kering shares, Kering finance chief Armelle Poulou said in April. "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, declining to be named owing to the sensitivity of the matter. Mayhoola, which does not have a press office, did not respond to a request for comment sent to its corporate email address. A person close to the fund described de Meo's expected arrival at Kering as good news. De Meo's most pressing challenge, however, is Gucci. The Italian label has struggled since star designer Alessandro Michele left in late 2022 and the company's recent appointment of creative director Demna from Balenciaga disappointed investors. Coming with three decades of automaking experience, de Meo may initially focus on costs, said a Kering adviser who declined to be named, while luxury sector adviser Mario Ortelli said it could be difficult for de Meo to come from a different industry and give an opinion on a creative designer. But the aforementioned cross-sector successes of Polet, Nair, Vigna and Marchionne offer hope for de Meo. Polet, who joined Gucci as CEO in 2004 after a 26-year career at Unilever, is credited with reviving the label after the departure of famed designer Tom Ford. Nair switched from Unilever to Chanel in 2022 and lifted sales to $18.7 billion in 2024 from $15.6 billion in 2021. Other cross-sector success included Ferrari boss Benedetto Vigna, who joined the supercar manufacturer from chipmaker STMicro in 2021 and led a push towards highly profitable personalised offers to clients. Another was the late Sergio Marchionne, architect of the successful Fiat-Chrysler merger and a former boss of de Meo, who joined Fiat from verification company SGS.
Local France
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France shuts Israeli weapons booths at Paris Air Show
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