Gucci Owner Picks Auto Executive for One of Global Luxury's Top Jobs

Yahoo

6 hours ago

PARIS—Francois-Henri Pinault, the billionaire heir who spent two decades transforming Kering into a luxury powerhouse, is stepping back as chief executive, hoping an auto-industry veteran can pull Gucci and Saint Laurent out of a slump.
Kering is set to name outgoing Renault chief Luca de Meo as CEO, people familiar with the matter said. That would end months of speculation about a possible leadership change at the French fashion group, which also owns Bottega Veneta, Balenciaga and Alexander McQueen.
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Pinault, who took charge in 2005 from his father, oversaw Kering's shift from a sprawling retail conglomerate to a focused luxury player. The move paid off handsomely during the boom years, but it has since run into trouble.
Renault said de Meo, who has led the carmaker for five years, would 'step down and pursue new challenges outside the automotive sector.' His last day will be July 15. Kering declined to comment.
For Kering, the move would represent a gamble at a precarious moment. Once a leader in European luxury, the group now lags behind rivals such as Hermès and Bernard Arnault's LVMH by a widening margin.
Gucci, Kering's biggest brand by revenue, has stumbled in China and lost ground to many competitors. Saint Laurent has also struggled, weighed down by a smaller wholesale business and a tougher U.S. market. Kering's market value has dropped about 70% from a high three years ago.
'De Meo has a titanic challenge ahead of him,' said Luca Solca, analyst at Bernstein, of the likely appointment, which was earlier reported by France's Le Figaro newspaper. 'Investors will need to hear what it is that de Meo plans to do and digest how soon his plans can be realized.'
Investors gave a warm reaction to the news. Kering shares rose 9% in Paris on Monday morning, while Renault fell 6%.
Pinault has considered splitting the CEO and chairman roles for several months, according to people familiar with the matter, and brought in a headhunter to help find a new CEO. It couldn't be determined whether Pinault will stay on as chairman.
Even with a new CEO, the Pinault family will still call the shots at Kering, given that they hold a 42% shareholding and about 60% of the company's voting rights. The holding accounts for the bulk of the family's fortune, estimated at just under $20 billion.
With de Meo, Kering is betting that an executive who revitalized car marques can do the same for handbags and ready-to-wear clothes. De Meo brings strengths in brand building and marketing: He helped turn Fiat's modern 500 into a cultural icon, carved out Seat's sporty Cupra line, and refocused Renault by slimming its model range and boosting profitability in hybrids and electric vehicles.
De Meo is also no stranger to craftsmanship: He collects intricate Swiss watches and counts Pietro Beccari, CEO of LVMH's Louis Vuitton brand, as a close friend—a bond cemented over regular padel matches.
Still, running a carmaker and leading a luxury conglomerate demand different skills. Success in autos relies heavily on industrial scale, efficiency and engineering excellence. High fashion, by contrast, depends more on narrative, cultural cachet and the unpredictable chemistry between designers and audiences. A luxury leader must be able to manage a stable of creative directors, handle viral social-media moments and safeguard brand mystique.
Reviving underperforming brands has become more complex and costly, with investors wary of turnaround stories and consumers gravitating toward established leaders, said Thomas Chauvet, luxury analyst at Citi. He said Kering faces a long road to restore momentum at Gucci and Saint Laurent and secure steady growth and cash flow.
Pinault has been candid about the need for bold action and has shaken up Kering over the past two years. He named two deputy CEOs and became more involved in so-called brand-elevation strategies, which aim to ensure that every action taken builds the brand's long-term standing, in areas from real estate to marketing and product development.
At Gucci, which made up almost half of sales and more than 60% of core profit last year, a new CEO took over in the fall. A new creative director, Demna Gvasalia of Balenciaga, is due to take over the creative reins in July.
Write to Nick Kostov at [e-mail]
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