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- Watch Renewable Stocks as Bill Proposes Early End to Tax Credits
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*TRUMP: MACRON HAS NO IDEA WHY I AM NOW ON MY WAY TO WASHINGTON
*TRUMP: NOT GOING BACK TO DC BECAUSE OF A CEASE FIRE
*TRUMP: RETURN TO DC HAS NOTHING TO DO WITH A CEASE FIRE
*TRUMP: REASON WHY GOING BACK TO DC 'MUCH BIGGER THAN THAT'
*TRUMP POSTS ON TRUTH SOCIAL ABOUT G-7 DEPARTURE
EU should be open to resuming Russian gas imports, says Austria
Vienna says Brussels should reassess ban once war in Ukraine is over
The EU must be open to resuming Russian gas imports in the event of a peace deal being brokered to end the war in Ukraine, Austria has said — one of few countries in the bloc to openly float such an option.
Brussels “must maintain the option to reassess the situation once the war has ended”, the Austrian energy ministry told the Financial Times.
The statement confirmed reports that Elisabeth Zehetner, the Austrian state secretary for energy, made this plea to her EU peers at a meeting in Luxembourg on Monday, said diplomats with knowledge of the discussions.
Vienna’s stance marks the first time since Moscow’s full-scale invasion of Ukraine in 2022 that an EU member state other than Hungary or Slovakia openly floats the resumption of Russian gas imports once the war is over.
The European Commission on Tuesday is set to propose banning any new gas contracts with Russia and terminating existing ones over the next two years — regardless of the outcome of peace talks.
Dan Jørgensen, the EU’s energy commissioner, said on Monday that a potential peace deal should “not lead to us starting to import Russian gas again”.
“That would be a very unwise decision because that would just be refilling Putin’s war chest with money. I think that would be to repeat the mistakes that we have done in the past,” he added.
Unlike Russian coal imports, which the EU banned in 2022 and a G7 price cap on Russian oil introduced in 2023, gas has not been subject to any EU restrictions — though most countries largely stopped importing the Russian fossil fuel, notably Germany, even as its economy was severely affected as a consequence. Imports of Russian liquefied natural gas (LNG) went up, with a record 16.5mn tonnes imported last year.
European officials have previously debated whether a return to Russian gas should be part of peace negotiations with Russia — with the commission firmly opposing such a step. Brussels is also proposing a ban on the Nord Stream pipelines connecting Germany to Russia — a measure endorsed by German chancellor Friedrich Merz as a way to quell any potential internal discussions about reverting to cheap Russian gas.
Austria has depended heavily on Russian natural gas for decades, importing around 80 per cent of its gas from the country before the war in Ukraine. This reliance was underpinned by long-term contracts between Russia’s Gazprom and Austria’s OMV, of which the government owns 31.5 per cent. OMV cut ties with Gazprom in a historic break last December following a long-running contract dispute.
Vienna has taken steps to diversify its supply, particularly by sourcing gas from other European countries such as Germany. The country, which is neutral politically but supports sanctions, has faced criticism for lagging in reducing this dependency since the war began.
Its neighbours Hungary and Slovakia, which remain dependent on Russian gas and which are led by Russia-friendly governments, have been vocal in their opposition to the commission’s plan to end all Russian fossil fuel imports by 2027.
Italy, which imported most Russian gas last year according to the think-tank Ember, previously also floated the option of resuming gas imports once the war is over, in discussions behind closed doors.
A spokesperson for the Italian energy minister declined to comment.
The commission plans to use trade law when proposing the complete ban on Russian gas, the FT has reported.
Jorgensen said that unlike the sanctions regime, which is subject to unanimous backing by the EU’s 27 governments every six months, the ban “will stand until someone decides to change it”.
Several countries have raised concerns that the legal basis for the ban will be strong enough to enable companies to call on force majeure clauses in their existing contracts without paying hefty penalties to Russia.
Jorgensen said he had “a very clear opinion from the legal team of the commission stating that since this will be a prohibition, a ban, the companies will not get into legal problems”.
London faces higher risk of summer wildfires, capital’s brigade warns
Fire services across UK invest in new kit and training as impacts of climate change grow
London is at an increased risk of wildfires this summer, the UK capital’s fire service has warned, as it steps up efforts to prepare for blazes by investing in new equipment and sending firefighters on specialist training.
London Fire Brigade, which traditionally has fought property fires rather than those in vegetation, told the Financial Times it had been working with counterparts around the world to improve its response to wildfires.
Greater Manchester Fire and Rescue Service is among those that have travelled to Catalonia in Spain to learn how to tackle such blazes.
The capital was hit by a spate of wildfires that destroyed dozens of buildings on the UK’s hottest day on record in July 2022. Soaring temperatures across the summer led to 76 fires being reported in Epping Forest on the London-Essex border alone between June 26 and August 16 2022.
The unprecedented vegetation blazes on July 19 marked London Fire Brigade’s busiest day since the second world war.
Darren McLatchey, LFB deputy assistant commissioner, said that while wildfires had historically been uncommon in London, the risk was increasing because of climate change.
The driest spring in more than a century coupled with forecasts of a hot summer risked creating ideal conditions for blazes in the capital this year, he added.
“We are planning and anticipating that there is likely to be fires this year in open areas,” he said. “Climate change is having a very dramatic impact. In the last few years we have had a dramatic increase in fires in grass and open areas.”
While most wildfires in the UK are caused by human activity, scientists say climate change increases the risk and severity of such events by creating warmer, drier conditions. Drier vegetation linked to drought, for example, is more susceptible to ignition.
Other parts of the UK, such as Scotland, have already suffered an intense start to the wildfire season this year, as well as low rainfall.
A drought was declared in Yorkshire this week, following the north-west of England in May. Three other areas — the north-east and east of England and the West Midlands — are also experiencing prolonged dry weather, the Environment Agency has warned.
In addition to fire services across the country boosting efforts to better prepare for wildfires in recent years, the Forestry Commission has run specialist training for landowners, property managers and firefighters.
The non-ministerial government department for woodlands has filled about 1,800 places across five courses since 2021, and its next course is due to take place in July at Windsor Park in Berkshire.
In London, which is home to more than 100 fire stations, about 30 fire station commanders are now trained wildfire support officers, having participated in five days of specialist training. This included a trip to Northumberland, where the local fire service has more experience responding to open air blazes.
Since 2022, LFB said all London firefighters had undergone enhanced training on wildfires at the so-called urban-rural interface. The fire risks to people and property is greater in the area where green or forested spaces meet built-up spaces.
The service added that it was also running a pilot of four wildfire response vehicles, which have off-road capability and enable firefighters to use the water pump while driving, in contrast to traditional fire engines.
It also has wildfire beaters, long-handled, spade-like tools used to beat down grass fires; backpack blowers, which enable firefighters to push flames back into already burnt areas; and “holey hoses”, whose pre-prepared holes create a curtain of water.
Zack Polanski, Green party deputy leader and chair of the fire committee at the London Assembly, said LFB had learnt lessons from the “huge wildfires” of 2022, but concerns remained about preparedness for a large wildfire event.
He warned that the capital’s firefighters lacked lighter personal protection equipment commonly used when fighting wildfires across Europe. A trial of such PPE is taking place.
“Unless people have experienced it or seen it, [a wildfire] can seem like an abstract idea . . . People don’t realise how terrifying and how destructive it is,” he added. “We need to make our cities more resilient.”
Guillermo Rein, professor of fire science at Imperial College London, said the city’s extensive green areas, alongside suburban gardens that are often surrounded by tall wooden fences, made for plentiful fuel for a fire.
He also warned that stronger wind conditions than seen three years ago could cause worse damage.
“If we have a heatwave with a bit of wind, the fire brigade in London, unfortunately, will not be able to stop these fires. The probability of this is low . . . But we were very close to having a second great fire of London in 2022,” he said, referring to the devastating blaze of 1666.
A paper by Rein and colleagues published this year warned of so-called firewaves in London and other urban centres, triggered by heatwaves and dry conditions. The researchers linked waves of wildfires to vapour pressure deficit — a measure of the atmosphere’s ability to extract moisture from the land surface.
Rob Gazzard, chartered forester and surveyor at the Forestry Commission, said how fire services responded to wildfires was “only one part of the puzzle” in addressing the rising risk of forest and grass fires.
“What happens beforehand is critically important,” he said, pointing to the role of land managers and others in creating fire and fuel breaks during cooler periods of the year.
LFB’s McLatchey urged local authorities, councils and landowners to “manage the gap” between green areas and the urban environment by creating fire breaks, such as by cutting grass to a low level in the spaces near properties.
From cars to handbags: can Renault’s Luca de Meo revive Gucci owner Kering?
Italian transformed motor group but views are split on whether his methods will work in luxury sector
Luca de Meo was among the French business elite celebrating the opening of the 2024 Olympic Games at a party hosted by luxury group LVMH at its five-star Cheval Blanc hotel in Paris last July.
The Renault chief executive joined LVMH patriarch Bernard Arnault and top executives such as Louis Vuitton chief Pietro Beccari. But few expected that within a year the motor industry veteran would end up with the top job at LVMH’s longtime rival: Kering.
The Italian is set to leave Renault next month to become boss of Kering, the struggling owner of Gucci and Saint Laurent, from mid-September.
While de Meo has spent his entire career in the car industry, he has been making discreet overtures to the luxury industry for some time, according to two people with knowledge of the situation.
He cemented his reputation by leading a turnaround of Renault, which he took over in 2020 when it was still reeling from the departure of Carlos Ghosn the previous year. Ghosn had been ousted following his arrest in Japan on charges he denies, later making a daredevil escape to Lebanon in a musical instrument box.
Since de Meo took over in July 2020 Renault’s share price has almost doubled, while Volkswagen’s has fallen by a third and Stellantis’s has been almost flat. Renault’s operating profit margin improved from a loss in 2020 to a record 7.6 per cent last year.
As he moves from one top French company to another and prepares to steer another corporate turnaround, the question is whether de Meo’s lack of experience selling handbags and high heels will help or hinder his attempt to revive Kering.
“Luxury is a bit different from carmakers” said one luxury executive, who said de Meo was “a big captain of industry and a real star” who could still succeed in his new role.
“Kering isn’t lacking in creativity, but in structure and discipline,” the person said.
A combination of strategic mis-steps and a global slowdown in demand for high-end handbags and watches has left Kering in a difficult position. Flavio Cereda, fund manager and luxury specialist at GAM, said Kering had to “do something big” to address the situation.
Kering’s slowdown follows several years of strong growth. Revenues increased by a third to a peak of €20.4bn between 2018 and 2022, driven by the boom in luxury demand in China and the success of Gucci.
But Gucci, which accounts for about half of group revenues and two-thirds of operating income, has since fallen out of favour with few timeless products to offset industry downturns or changes in fashion trends.
Kering’s second-biggest brand, Saint Laurent, has also been struggling. A €3.5bn deal for niche perfumer Creed is among the acquisitions that have raised questions about Kering’s dealmaking, along with a series of expensive real estate purchases. It is now selling stakes in some of the buildings as it seeks to reduce debts.
In March, shares dropped 12 per cent in a day as Kering appointed designer Demna Gvasalia as Gucci’s creative head after his predecessor lasted just two years in the role.
While the shares rose 11.8 per cent on Monday after news of de Meo’s appointment, they are still down by more than 60 per cent in the past three years, reducing the Paris-listed group’s market value to €24.1bn.
Bernstein analyst Luca Solca said de Meo’s top priorities should be reviewing the team and strategy at Gucci, the group’s biggest brand, as well as cutting debt and refocusing investments.
At Renault, de Meo cut costs and improved the product range, including the release of the popular Renault 5, one of its most affordable electric vehicles.
Some question whether his experience with cost-cutting and product engineering will yield the same results in the luxury industry, where sales are often driven by emotion and aspiration as much as quality.
But others point out that a number of top managers have come from outside the sector: Antonio Belloni, former group managing director of LVMH, came from diaper and detergent maker Procter & Gamble, and Louis Vuitton’s Beccari from industrial and consumer products group Henkel.
People close to Kering say François-Henri Pinault, the scion of Kering’s controlling family who de Meo will replace as chief executive, wants the new hire to deploy his business development and marketing acumen to revive the group’s fortunes. Operating income fell by almost half in 2024.
Pinault, who will remain as chair, a role he previously held alongside his duties as chief executive, said on Monday that de Meo was “not only a great developer . . . but also very operational with a deep understanding of the value chain [in his industry]”.
“He will do that here . . . while bringing his new way of looking at things, which will be very precious,” he added.
People who have worked with de Meo describe him as a street smart, ambitious leader who turned Renault’s relative lack of clout into an asset.
The group’s European focus has left it less exposed to the US tariffs and market share loss in China, while he used partnerships with other providers such as a combustion engine tie-up with Geely to get around Renault’s lack of scale.
For Kering, De Meo was “hardly a ‘plug and play’ appointment but it’s a start, finally”, said GAM’s Cereda. “In the end, it’s still about a product offering that is just not working at this time.”
Known to have a taste for sharp suits and Swiss watches, de Meo’s management style has not always sat well with colleagues, with his ego said to have caused friction at times. “De Meo’s problem is de Meo,” said an executive in the auto industry.
But one person who has advised de Meo said he was good at spotting his weaknesses and hiring people to either compensate for expertise he lacks, or to “keep him in check”.
People close to the group hope the Milan-born de Meo’s French and Italian cultural ties will help him cultivate rapport between Kering’s French head office and its operations in Italy, where there have been tensions over the direction of the company, according to several people with knowledge of the situation.
However, he has a long road ahead. “It’s very difficult to turn around a brand like Gucci once you’ve destroyed its image . . . When you lose the consumer like that it takes time to regain them,” said one French banker.
Another challenge will be to build a strong relationship with Pinault, who has over two decades transformed Kering from a retail and fashion conglomerate into a leading pure luxury player.
Pinault had been thinking about changes to Kering’s governance, including splitting the chair and CEO roles since 2023, quietly sounding out candidates for chief executive. But it was not until he met with de Meo through recruitment firm Jouve in recent months that he felt he had identified the right person.
Pinault insisted on Monday that de Meo would be “a full CEO, with all the empowerments I had”.
“I will be fully involved in strategic orientation as chair of the board . . . but I won’t step in and short-circuit the new CEO,” he said, before adding: “I don’t expect a revolution.”
Spotify’s Daniel Ek leads €600mn investment in defence start-up Helsing
German drone maker valued at €12bn to become one of Europe’s most valuable tech groups
Spotify founder Daniel Ek is leading a €600mn investment in Helsing, valuing the German defence tech group at €12bn and making it one of Europe’s most valuable start-ups.
The deal comes as the Munich-based start-up is expanding from its origins in artificial intelligence software to produce its own drones, aircraft and submarines.
Helsing is benefiting from a surge of investment in defence groups, as a highly charged geopolitical environment spurs nations all over the world to increase military spending and the war in Ukraine triggers a rethink of battlefield technology.
Prima Materia, the investment company founded by Ek and early Spotify investor Shakil Khan in 2020, made the first significant investment into Helsing in 2021, months before Russia’s full-scale invasion of Ukraine.
Now Prima Materia is “doubling down”, Ek told the FT. It is leading the start-up’s latest investment alongside existing backers including Swedish defence group Saab and venture capitalists Lightspeed Ventures, Accel, Plural and General Catalyst.
The deal brings its total capital raised to €1.37bn
“The world is being tested in more ways than ever before. That has sped up the timeline” for Helsing’s financing, Ek said, pointing in particular to the conflict between Russia and Ukraine, where drones and other AI-powered systems have been deployed at scale for the first time.
“There’s an enormous realisation that it’s really now AI, mass and autonomy that is driving the new battlefield,” said Ek. “We can’t understate the implications of that for this conflict [in Ukraine] or really any conflict going forward.”
Four-year-old Helsing’s valuation has more than doubled since it raised €450mn less than a year ago. The latest investment, which is made through a combination of traditional equity and other financing, values the company at around €12bn, according to people familiar with the matter.
The figure ranks Helsing among the five most valuable private tech companies in Europe. The company declined to comment on its valuation.
The deal comes after California-based start-up Anduril recently raised $2.5bn at a $30.5bn valuation. European drone makers Quantum Systems and Tekever were both valued at more than €1bn last month.
Helsing has sold thousands of strike drones, produced in its own facility in southern Germany, to Ukraine. It has also secured contracts the UK, Germany and Sweden.
The company recently completed successful test flights of its autonomous air combat system, which piloted a Saab fighter jet, and unveiled plans for a fleet of unmanned surveillance submarines.
“We’re now at an inflection point . . . where we are going from a software company to an all-domain, AI software and hardware company,” said Ek, who also chairs Helsing.
Helsing was founded in 2021 by Torsten Reil, a video games entrepreneur, Gundbert Scherf, a former German defence ministry official, and Niklas Köhler, an AI researcher. The trio has vowed not to sell the company and instead plans to go public in the future.
Helsing has struck partnerships with Saab to incorporate its AI software into the Swedish defence group’s systems, as well as with Paris-based Mistral to build out its platform’s decision-making capabilities. However, a partnership with German military giant Rheinmetall, announced in 2022, fizzled last year.
Ek’s initial investment into Helsing triggered a backlash against Spotify, the digital music service he co-founded in 2006 and still runs as chief executive. But he said he was not worried about the potential threat of another boycott.
“I’m sure people will criticise it and that’s OK,” Ek said. “Personally, I’m not concerned about it. I focus more on doing what I think is right and I am 100 per cent convinced that this is the right thing for Europe.”
After Hours Summary: Solar stocks under pressure on Reuters report that Senate GOP seeks to end credits, RUN -27.5%, SEDG -23%, ENPH -15.5%, FSLR -10%; MMYT -10.8% on offering and deal to buy shares from TCOM
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: APPS +10.6%, LEN +3.5%
Companies trading higher in after hours in reaction to news: BLND +1.7% (BLND and ONIT expand partnership), MUSA +0.9% (operations update), FITB +0.6% (authorizes new 100 mln share repurchase program), CNC +0.5% (Senate Republicans issue Medicare/Medicaid proposals), RKLB +0.3% (adds two new missions), HUM +0.2% (Senate Republicans issue Medicare/Medicaid proposals), BA +0.1% (US clears potential $2bln sale of fighter jet parts to Australia, according to Reuters), ANET +0.1% (names former FSLY CEO as its new COO), HIPO +0.1% (to repurchase $14.5 mln in shares from Lennar)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: None
Companies trading lower in after hours in reaction to news: RUN -27.5% (Senate tax committee proposes full phase-out of solar and wind energy tax credits, according to Reuters), SEDG -23% (Senate tax committee proposes full phase-out of solar and wind energy tax credits, according to Reuters), ENPH -15.5% (Senate tax committee proposes full phase-out of solar and wind energy tax credits, according to Reuters), MMYT -10.8% (files for ordinary share offering; to repurchase MMYT shares from TCOM), FSLR -10% (Senate tax committee proposes full phase-out of solar and wind energy tax credits, according to Reuters), RDW -9.5% (commences $200 mln common stock offering), TCOM -5.4% (to sell MMYT shares to MMYT), CTRI -4.6% (SWX commences 9.5 mln share offering of CTRI common stock), BLDP -2.8% (CEO to step down, names new CEO), TPC -0.9% (awarded $34 mln project), CVS -0.7% (Senate Republicans issue Medicare/Medicaid proposals), ONIT -0.4% (BLND and ONIT expand partnership), KKR -0.3% (to acquire Zenith Energy), AMBC -0.1% (provides timing update on sale of its legacy financial guarantee business), MKL -0.1% (announces new leadership appts as part of a strategic regional realignment), MSFT -0.1% (tensions with OpenAI reach boiling point, according to WSJ), CSTL -0.1% (collaboration and license agreement with SciBase), UNH -0.1% (Senate Republicans issue Medicare/Medicaid proposals)
Closing Stock Market Summary
The stock market regrouped today and reclaimed a portion of the losses it suffered Friday, comforted somewhat by an understanding that the Israel-Iran conflict remains relatively contained and has not led to any major disruption in oil supply lines.
In a related development, press reports suggested today that Iran is working diplomatic channels to try to negotiate a ceasefire agreement with Israel, although Israel has not expressed similar overtures.
The latter point notwithstanding, the stock market was imbued with a positive bias that was the strongest at today's open, which carried the S&P 500 as high as 6,050. Buyers, though, didn't maintain that early conviction. The major indices trended lower from those opening highs in a gradual manner over the remainder of the session but still ended the day comfortably above the unchanged line.
The gains were fortified by the outperformance of the mega-cap stocks, which registered in the leadership of the information technology (+1.5%), communication services (+1.5%), and consumer discretionary (+1.2%) sectors. The Vanguard Mega-Cap Growth ETF (MGK) was up 1.3% versus a 0.9% gain for the S&P 500.
Separately, the semiconductor stocks were the standout performers, particularly Advanced Micro Devices (AMD 126.40, +10.24, +8.82%), which rallied on a CNBC report that the company might have secured a GPU deal with Amazon (AMZN 216.17, +4.07, +1.92%). The Philadelphia Semiconductor Index surged 3.0%, leaving it up 23.3% for the quarter.
On the flip side, defense stocks and energy shares retreated from Friday's leadership positions as the market's angst about the Israel-Iran conflict eased.
The S&P 500 energy sector (-0.3%) traded lower in conjunction with WTI crude futures (71.83, -1.33, -1.8%). Relative weakness was also seen in the more defensive-oriented utilities (-0.5%), health care (-0.4%), and consumer staples (+0.02%) sectors.
Breadth figures favored advancers over decliners by a less than 2-to-1 margin at the NYSE and Nasdaq, with a narrowing in that edge as the session progressed.
- S&P 500: +2.6% YTD
- Nasdaq: +2.0% YTD
- DJIA: -0.1% YTD
- S&P 400: -2.7% YTD
- Russell 2000: -4.8% YTD
Reviewing today's economic data:
- The Empire State Manufacturing Survey for June was weaker than expected at -16.0 (consensus -6.6; prior -9.2), with the indexes for new orders and shipments both declining. This was the fourth consecutive decline in manufacturing activity in New York State; however, firms turned positive about conditions for the next six months.
New Kering CEO Luca de Meo Seen Bringing a ‘Fresh Vision’ to Luxury Group
Francois-Henri Pinault, who has held the CEO title since 2005, is to remain chairman of the family-controlled luxury group. De Meo is expected to start on Sept. 15.
As the new chief executive officer of Kering effective Sept. 15, Renault executive Luca de Meo is expected to bring a fresh vision to a luxury sector facing myriad headwinds and “structural changes.”
“He will bring new ways of looking at things,” Francois-Henri Pinault said of his successor during a conference call Monday evening to elaborate on the changing of the guard.
Pinault, who has held the CEO title since 2005 and navigated the family-controlled conglomerate through multiple transformations, traversing both buoyant and challenging periods, is to maintain the chairman role.
“I will be fully involved in the strategic orientation of the group as chairman… but I will not step in and short-circuit the CEO in his prerogatives regarding the priorities, the organization or the key appointments of the group,” Pinault said.
That leaves de Meo to orchestrate a turnaround at the troubled luxury giant, dragged down by a steep slowdown at cash-cow brand Gucci, and worrisome wobbles at Saint Laurent and McQueen.
Pinault said the “fit and chemistry between us was obvious within one or two minutes,” lauding de Meo as a “developer” who “brings a global perspective on markets and growth” as well as an “affinity with the product side” and a knack for “revitalizing brands.”
Exane BNP Paribas analyst Antoine Belge asked if Kering would maintain the current management structure, forged in 2023 when Pinault promoted Saint Laurent CEO Francesca Bellettini to deputy CEO in charge of brand development, and chief financial officer Jean-Marc Duplaix to deputy CEO and chief operating officer.
Pinault allowed that de Meo, who spent his whole career in automotive firms, does not know the luxury fashion industry “so he will need strong support and strong expertise around him, and we have that inside the group, starting with Jean-Marc and Francesca.”
However, as a “fully-fledged CEO,” de Meo “will have to set his own priorities, to look at the organization of the group, to look at the key position of the group.”
That said, “we are not slowing down all the action plans defined for 2025,” Pinault added. These include the strategic repositioning of the brands, debt management, and the refinancing of real-estate assets.
In a statement, de Meo said he was “approaching this new professional challenge with enthusiasm, eagerness, and confidence, inspired by the strength of the group’s brands and the expertise of its people. I am convinced that together we will continue to make Kering an essential player in the luxury industry.”
Shares in Kering surged 11.8 percent on Monday on the expectation of management succession, with several equity analysts giving a thumbs up.
“Kering needs change, as performance has continued to deteriorate,” Bernstein’s Luca Solca said in a research note, highlighting that the French company’s share price has fallen 28 percent in 2025 year-to-date and 78 percent from its peak in mid-2021, “largely driven by shrinking sales at its main brand, Gucci, which has been undergoing a multi-year metamorphosis.”
Citi’s Thomas Chauvet trumpeted de Meo’s credentials.
“De Meo is perceived to have largely contributed to Renault’s turnaround through product newness, technological innovation, (electric vehicle) transition shift, brand elevation, and a return to growth and profit,” Chauvet wrote, while cautioning that “execution of luxury brand turnarounds has become more complex, lengthy, costly and far less public-market-friendly in the past few years.”
He explained that this reflects “consumer preference for top brands rather than those in transition and significant P&L disruption from greater investment commitment and lower cost flexibility.”
“There is still a considerable amount of work ahead at Gucci and Saint Laurent (~80 percent of group EBIT combined, pre-central costs) to rejuvenate both brands and generate a steady stream of revenue and cash flow for the group,” wrote Chauvet.
Kering posted a 14 percent decline in first-quarter revenues, with Gucci down 25 percent, Saint Laurent 9 percent and “other houses,” which includes Balenciaga, McQueen, Pomellato and Brioni, off 11 percent.
Solca argued that brand management and marketing are de Meo’s forte, “which dovetails with what the luxury industry does – for which he seems passionate.”
“We were well aware of his affinity for the luxury space, in particular his passion for complicated Swiss watches that we discussed with him at the end of a Renault event in March 2022,” Solca noted. “It is not hard to imagine how intriguing he found the Kering opportunity.”
In a second report issued after the conference call, Solca argued that de Meo “could enact significant change. Key priorities on our list would include resolving the inherent tension in the deputy co-CEO roles, strengthening the leadership team at Gucci, and restructuring or streamlining group and brand-level capex commitments.”
Renault Group revealed Sunday that de Meo had decided to “step down and pursue new challenges outside the automotive sector,” with his departure date set for July 15. Shares in Renault fell 8.7 percent Monday on the news.
The Italian executive has spent five years leading Renault and boasts 30 years in the industry at brands including Fiat, Alfa Romeo, Toyota, Volkswagen and Seat.
Kering has recruited industry outsiders in the past to run its fashion business. What was then Gucci Group famously recruited Robert Polet from Unilever’s ice cream and frozen foods division as its president and CEO from 2004 to 2011.
Still, it marks a significant change for Pinault to take a step back after 20 years and hand the CEO reins back to a non-family member.
In 2005, Pinault had succeeded Serge Weinberg at what was then PPR, a retail conglomerate that was still relatively new in the luxury space.
Pinault was previously president of Fnac — PPR’s music, book and home electronics chain — and had orchestrated the acquisition of the Surcouf electronics chain in the late-Nineties.
When he assumed the management helm of the group he accepted that PPR faced skepticism in the industry for its lack of experience in the luxury realm.
At the time, he said the solution was “to have the best professionals in charge of those businesses: the right teams at the right level. It’s much more a state of mind. You have to be surrounded by very good professionals. If we had taken the decisions without the luxury professionals we have in the group, that would have been dangerous.”
Pinault certainly had an eventful tenure, transforming the family-controlled group by spinning off its retail chains and changing its name to Kering in 2013. It was the parent of a fleet of international brands specializing in fashion and accessories across the luxury and sport-lifestyle segments, the divisions built around Gucci and Puma, respectively.
Originally an acronym for Pinault-Printemps-Redoute, PPR began edging out of retail in 2006 when it sold the Printemps department store chain, following up with a listing for African trading company CFAO in 2009 and a sale of the Conforama furniture chain to Steinhoff International in 2010.
In that vein, Kering would end up exiting the sport-lifestyle business, selling off its stakes in Puma, Electric and Volcom to become a pure luxury player in 2019.
Pinault enjoyed many big years in his tenure, perhaps none bigger than 2023.
That was the year he took beauty in-house; acquired Creed; invested in Valentino and forged a strategic alliance with Qatari investment group Mayhoola; recruited new designers for Gucci and McQueen; parted ways with longtime Gucci executive Marco Bizzarri, and entrusted Saint Laurent president and CEO Francesca Bellettini with overseeing all the brands in the French group’s portfolio.
More recently, the executive has been rueful, telling shareholders at the company’s annual meeting last April that he was unhappy with Kering’s results and share price performance. “I am totally committed to making sure the stock price recovers by restoring financial performance, not in the very short term, but in a sustainable manner in order to generate a stock price that is less volatile and more solid in the months and years to come,” he said.
Kering is banking on its star Balenciaga designer Demna to speed the turnaround at Gucci, where he starts as creative director next month, with his first designs to be unveiled during Milan Fashion Week in September.
Demna’s successor Pierpaolo Piccioli is to show his first Balenciaga designs in September. Louise Trotter is also to make her debut this fall at Bottega Veneta, which logged a 4 percent uptick in the first quarter.ew