Kering tries to fix Gucci with management overhaul

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French luxury group Kering has announced a major management overhaul, parachuting in a transitional leader at Gucci to fix underperformance at its biggest brand and naming two deputy chief executives. 

The moves unveiled by chair and chief executive François-Henri Pinault on Tuesday are part of an effort to give a new direction to the group that in recent years has struggled to deliver growth at the pace of sector leader LVMH or leather specialist Hermès. 

Gucci CEO Marco Bizzarri will step down in September and be replaced on a temporary basis by Jean-François Palus, described by billionaire owner Pinault as his “right-hand man and daily sparring partner”.

Rising star Francesca Bellettini, who has led an expansion at Yves Saint Laurent since 2013, will become deputy Kering chief executive for brand development, with all of the group’s brands reporting to her to steer “their next stages of growth”. Chief financial officer Jean-Marc Duplaix will be the other deputy CEO, overseeing operations and finance.

With Kering shares continuing to trade at a significant discount to LVMH and Hermès, analysts have questioned the group’s overreliance on Gucci, which brings in half of sales and two-thirds of operating profit.

The brand went on a growth tear under the dual leadership of Bizzarri, a former management consultant who helped transform Bottega Veneta into a billion-euro brand, and star designer Alessandro Michele. They more than doubled sales from €3.9bn in 2015 to €9.7bn in 2019 before the pandemic hit.

Michele’s maximalist, eclectic and gender-fluid aesthetic was a hit with young shoppers in China and the US, but the novelty eventually wore off leading growth to sputter despite several promised turnrounds.

The company announced Michele’s exit in November; his replacement Sabato de Sarno, previously fashion director of men’s and women’s collections at Valentino, will show his first collection for Gucci in September.

The task of restoring momentum to the brand will now fall to Palus, in a sign of how Pinault wants to maintain a much closer grip over Gucci management, said a person close to the group. “There is a need to restore order at the brand,” the person said.

Gucci surpassed €10bn in annual revenues for the first time last year, and Jefferies analysts predict sales will rise just 5 per cent this year to €11bn. Such a pace would be slower than rival megabrands like Louis Vuitton and Chanel, but would be an improvement on the 1 per cent rise in 2022.

Luca Solca, an analyst at Bernstein, said Bizzarri’s departure “seems timed to give full visibility to the new chapter, ahead of De Sarno’s maiden fashion show in Milan, and is not totally unexpected”.

Thomas Chauvet, an analyst at Citi, said: “We view Kering’s organisational reshuffle as well-thought and logical, reinforcing decision-making, governance and succession while showing further determination to transform Gucci.”