Gucci Owner Picks Auto Executive for One of Global Luxury’s Top Jobs
Renault’s Luca de Meo faces a ‘titanic challenge’ at Kering, analyst says
Key Points
- Kering is set to name Luca de Meo, Renault’s CEO, as chief executive, replacing Francois-Henri Pinault, people familiar with the matter said.
- De Meo refocused Renault, slimming its model range and boosting profitability in electric vehicles.
- Kering’s shares, which have fallen steeply from a peak earlier this decade, rallied on the likely appointment.
PARIS—François-Henri Pinault, the billionaire heir who spent two decades transforming Kering KER 11.76%increase; green up pointing triangle into a luxury powerhouse, is stepping back as chief executive officer, hoping an auto-industry veteran can pull Gucci and Saint Laurent out of a slump.
Kering on Monday named departing Renault chief Luca de Meo as CEO, ending months of speculation about a possible leadership change at the French fashion group, which also owns Bottega Veneta, Balenciaga and Alexander McQueen.
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.
Now, Pinault said, Kering was “ready for a new stage in its development.” He praised de Meo’s “experience at the helm of an international listed group, his sharp understanding of brands, and his sense of a strong and respectful corporate culture.”
De Meo will take the helm on Sept. 15, subject to shareholder approval, Kering said. His last day at Renault RNO -8.69%decrease; red down pointing triangle will be July 15. Pinault will remain chairman.
For Kering, the move represents 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. “Investors will need to hear what it is that de Meo plans to do and digest how soon his plans can be realized.”
Kering investors welcomed the news. Kering shares rose 12% in Paris on Monday, after reports of the likely appointment emerged, while Renault stock fell 8%.
Pinault, who met de Meo a few months ago, told analysts he had been laying the groundwork to split the roles of chairman and CEO for a number of years, a process that accelerated in recent months. He brought in two headhunters to help identify a successor.
In addition to retaining the chairman’s role, Pinault and his family 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 the 58-year-old 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 has more than three decades of experience in the automotive industry, building a strong reputation as a brand builder and marketer. 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.