In a significant reshuffling at luxury goods conglomerate Kering, Marco Bizzarri, the President and CEO of Gucci, has announced that he will step down later this year. Bizzarri, who masterminded Gucci’s growth strategy since taking the helm in 2015, will officially depart on September 23. The changes in leadership are part of a strategic move aimed at capturing more of the rapidly expanding global luxury goods market. Kering’s managing director, Jean-François Palus, will replace Bizzarri on a transitional basis, according to the company’s statement. As part of his new role, Palus is “tasked with strengthening Gucci’s teams and operations,” focusing on rebuilding the Italian fashion house’s “influence and momentum,” to help Gucci return to its earlier influence. François-Henri Pinault, Kering’s chairman, and CEO, confirmed that Palus would “focus his energy on getting our largest asset in top shape.”
Kering’s Robust Vision
“We are building a more robust organization to fully capture the growth of the global luxury market,” Pinault said in a statement. As part of this strategic reorganization, Yves Saint Laurent President and CEO Francesca Bellettini has been promoted to Kering’s deputy CEO for brand development. In this capacity, she will manage all fashion houses under Kering, which include Balenciaga, Alexander McQueen, and Bottega Veneta. Simultaneously, Jean-Marc Duplaix, Kering’s Chief Financial Officer, will take on the role of another deputy CEO, overseeing operations and finance. This comes as Kering aims to promote executive roles in brand development and operations and finance functions.
Market Reaction and the Future
Following the announcement, Kering shares shot up, with the stock trading 7.2% higher later in the day. This leadership overhaul aims to revive Gucci, the brand responsible for just over half of Kering’s €20 billion ($22 billion) revenue last year, which has underperformed in recent years compared to other luxury brands. The impending departure of Gucci’s creative director of eight years, Alessandro Michele, last November, coupled with Bizzarri’s exit, signals a significant change at the fashion house. The fashion world now awaits the brand’s first collection by new creative director Sabato De Sarno, formerly of Valentino, to be unveiled in September.
Gucci’s Performance
The once high-flying Italian label has seen growth lagging behind rivals in recent years. Gucci’s revenue more than doubled between 2015 and 2019 under Bizzarri and Michele’s leadership, but the pandemic brought an end to years of soaring growth. Gucci’s previous designs, characterized as flamboyant and eccentric, may have been factors contributing to a dip in customer appeal.
Ambitions in China
Another focus of the strategic reorganization is to regain popularity in China. Gucci has begun steps to overhaul management in the region after appointing Laurent Cathala to oversee the brand’s fashion operations in the country. Nevertheless, Kering has indicated that a quick fix should not be expected, suggesting a long-term commitment to this pivotal market.
Comparisons with Luxury Market Peers
Comparatively, shares in Europe’s most valuable company by market capitalization, LVMH (LVMHF), have soared 26% since the start of 2023, while shares in Hermès International and Christian Dior have jumped by 30% and 17%, respectively. On the other hand, Kering’s shares have risen nearly 11% over the same period, closer to the average stock price increase of 8.4% for all companies in the benchmark Stoxx Europe 600 index.
Conclusion
Despite facing challenges, Kering’s commitment to reshaping its largest asset – Gucci – presents a promising future. With the unveiling of Sabato De Sarno’s debut collection in September and subsequent store availability early next year, the fashion world eagerly anticipates Gucci’s comeback. For more details, refer to the complete Kering press release.
