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MILAN – You don’t hear much about Gucci these days on social media or elsewhere. On Instagram, you can see a few images of celebrities posing with a handbag such as the classic “Horsebit 1955” or with some new luggage or sunglasses. But in Milan, Italy’s fashion capital and Gucci HQ, the brand is the talk of the town. What is going on – or rather not going on – at Gucci is a hot topic of discussion.

“I know that staff at Gucci are in a ‘wait and see’ mode, they are not super driven or motivated because they don’t know yet where the brand is going,” the former CEO of a major fashion brand said, having spoken to people at Gucci who were in the process of leaving or who had left recently.

“We hear that people are not very happy at Gucci,” one person who consults for several Italian fashion brands including Gucci told Miss Tweed on condition of anonymity. “They do not understand yet what direction the brand is taking.” And several other Milan-based fashion insiders echoed with similar comments.

Such a downbeat attitude is understandable. Gucci’s entire top management team has changed in the past two to three years – except for CEO Marco Bizzarri. The brand’s creative director Alessandro Michele left abruptly in November without an obvious replacement lined up. Gucci finally chose as its new creative director 40-year-old Sabato De Sarno, who was at Valentino and is not particularly well known. De Sarno started at Gucci mid-May. Since, nothing has been heard from him.

Gucci is in reset mode, but no one knows yet what it will be about. And the troubling thing is that industry insiders think that it’s not clear at Gucci either – yet.

“Marco [Bizzarri] asked Sabato what his vision for Gucci was and he liked it, but we don’t know what it is,” the former CEO said. “We all expect Gucci to be more glamorous and chic, close to what Tom Ford did, but what will it look like? We don’t know.”

Some industry observers wondered if the job was not bigger than De Sarno. At Valentino, he was in charge of ready-to-wear yet the bulk of Gucci’s sales and profits come from handbags. Will he be up to the task?

Kering asks for patience. The French group controlled by the Pinault family tells investors and industry observers they will discover De Sarno’s work at the Gucci show in September and they will then understand where the Italian brand is going. Sure. However, one thing is clear: there is much less buzz and anticipation in the air about the new Gucci than during its last creative reboot in 2015. Back then, Bizzarri was busy telling journalists and industry specialists how amazing the new Gucci was going to be under the new creative director Alessandro Michele and how the brand was going to roll out fantastic new services and concepts for its stores.

Michele relatively quickly produced images of things to come such as furry slip-ons, giving clues of about his world and sensibility and creating excitement about what to expect. Likewise, in the months before his first show for Burberry earlier this year, creative director Daniel Lee released images to give a sense of what to expect such as advertising campaigns featuring the brand’s blue knight and a refreshed logo. But from Gucci not a peep, not even crumbs to feed the pigeons of fashion eager to find out what will come out of the brand.

Michele’s first show in 2015 was a success. Collection after collection, show after show, his geek chic, baroque transgender looks won customers over and everyone wanted to wear Gucci, particularly the fashion-hungry young Chinese. Bizzarri quickly and effectively rolled out the brand’s new store concept and sales skyrocketed.

Gucci grew into one of the industry’s biggest success stories. Revenue soared to €9.7 billion in 2019 from €3.9 billion in 2015. In 2022, it stood at €10.48 billion. Its sales have grown in single digits annually since the pandemic, while peers such as Dior, Louis Vuitton, Prada and others enjoyed sales growth of 10-20%. Gucci has been underperforming for more than three years now.

Michele’s magic touch started to wane in 2020. His style looked somewhat repetitive and, most importantly, an exodus of talent began in earnest. In spite of their passion and dedication to Gucci, many top people left. Not because of Michele but because they were growing tired of working for Bizzarri, an intense executive who had grown into quite the authoritarian figure. “It’s his way or no way,” one former senior collaborator said. “Bizzarri is hugely talented and is a very good CEO, but he’s worn many people out. They just could not work for him anymore.”

The first major defection took place in 2019 when Michele lost his creative accomplice, chief merchandising officer Jacopo Venturini, who became CEO of Valentino the following year. Venturini took with him Alessio Vannetti who was in charge of communication at Gucci and became Valentino’s chief brand officer. With their departure, cracks started to appear in the beautiful castle Michele had built, as Miss Tweed reported earlier this year in a story about the make-or-break role of the chief merchandising officer.

Since then, there have been many other high-profile departures, some of them joining luxury jacket specialist Moncler, where there is a lot of creative energy and ambitious projects. Last year, Karim Fettous, who oversaw many Asian markets for Gucci, became President of Asia Pacific for Moncler. In May, Robert Triefus, Gucci’s former marketing maestro, became CEO of Moncler’s Stone Island outdoor brand. Piero Braga, who was in charge of Gucci’s retail strategy, left to run Slowear, an Italian brand that promotes a more durable consumption model. He’s one of several Gucci staff the brand has hired.

“There’s been a huge leakage of talent in the past three years,” one senior fashion executive in Milan said. “You can’t patch that by just hiring a new designer.” Today, few of those who took part in Gucci’s formidable ascent are still working for the brand. Gucci’s studio is also losing staff as it is in the process of moving to Milan from Rome where Michele was based. Not everyone is ready to follow, people close to the brand say.

For its part, Gucci says it’s putting in place a new dream team and promises they will do fantastic things. That’s great. But the recent wave of departures raises one logical question: what if the problem was not Michele but rather Bizzarri himself?

This theory is hardly new. Many investors have been asking Kering why the group did not appoint a new CEO after Michele left last year. “Some investors are clearly asking for a change of Gucci CEO even if that leads to a brand reset with margins being cut before any rebound is seen,” HSBC recently wrote in a note about Gucci.

If previously Michele was the omnipotent designer who was involved in many aspects of the brand’s operations, from image, ad campaigns to retail designs, today the role of his successor has been curtailed. “Bizzarri has taken quite a lot of the power away from the designer. But that’s also because he had probably given him too much power at some point,” one Milan-based executive said.

Bizzarri installed a new structure with several key people. There is Maria Cristina Lomanto, who was at Prada’s Miu Miu. She’s in charge of merchandising and retail. She works with Susan Chokachi, a Gucci veteran who used to lead the brand in the United States and is now looking after image and marketing. And there are many other new recent hires who replaced those who left. “Bizzarri has not given the keys of the house to Sarno. That’s pretty clear,” one Milan-based headhunter said.

Gucci is adamant that De Sarno will define the brand’s new creative vision and will inspire all of its teams. But such new structure makes you wonder whether it can work. De Sarno did not create the teams around him, Bizzarri did. If you look at who are the successful brands today, they are those with designers who have quite a lot of freedom and power. Think Hedi Slimane at Celine, Anthony Vaccarello at Saint Laurent, Maria Grazia Chiuri at Dior, Pierpaolo Piccioli at Valentino and the list goes on.

On July 27, Kering will publish its half-year results. Many analysts expect them to be a cold shower. Gucci generates the bulk of the group’s revenue and profit. “Q2 performance is unlikely to impress, with Gucci sales at constant foreign exchange rates still growing in the low single-digit territory despite an easing basis of comparison in China, whereas most sector peers could approach or even exceed 20% growth,” HSBC wrote in a note about Gucci published two weeks ago.

Concerns about Gucci’s vision, strategy and performance are reflected in Kering’s stock market price. Its shares stand now at around €500 – well below their August 2021 peak of €780.In early 2020, before the first series of lockdowns, they stood at around €600.

Comparatively, LVMH shares, which stood at €410 in early 2020 and at around €600 one year ago, are now trading much higher at €890. And Richemont shares, which stood at 70-80 Swiss francs in early 2020, have also been on the rise. In the past 12 months, the group’s share price has increased from 100 Swiss francs to more than 150 Swiss francs. Kering’s stock market performance in the past three years has been disappointing for investors.

“Despite the group announcing a new designer for Gucci, with Sabato De Sarno joining this May and his first products likely to be available in stores at the very back end of this year or early next year, some investors will question if this is going to be enough to reignite the Gucci brand,” HSBC wrote. “The low valuation of Kering shares is likely a function of doubts investors have about the equity story and notably some question marks about Gucci's roadmap,” said Erwan Rambourg, Global Head of Consumer and Retail Research at HSBC.

To that, add uncertainty about the timing of recovery of sales at Balenciaga, still reeling from its PR fiasco last year, and a marked slowdown at Bottega Veneta under designer Matthieu Blazy and the picture is far from rosy. The star is likely to be Saint Laurent, as in previous quarters. Kering management will say that its jewelry brands Pomellato and Boucheron are doing well,but they do not really move the needle in terms of sales and profits. It will also likely play up its ambitions in beauty having just bought high-end perfume brand Creed, its first major acquisition in the sector. But at questions and answers following the group’s trading update on July 27, investors will no doubt focus on Gucci – their top concern.