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Kering is welcoming back Alessandro Michele, whose appointment as creative director of Valentino suggests a strategic move to position the brand as a stablemate poised for growth.
On Thursday, shortly after Vogue Business’s Luke Leitch broke the news of Alessandro Michele’s appointment, Kering, which acquired a 30 per cent stake in Valentino from parent company Mayhoola for €1.7 billion last year, shared a statement from chairman and CEO François-Henri Pinault: “I am very happy that Alessandro has been appointed at the creative helm of Valentino and I am certain that with his creativity, culture and versatile talent, he will be able to interpret masterfully the unique heritage of this magnificent house and make it flourish. I can’t wait to see his passion, imagination and dedication at play in this new chapter for Valentino.”
With Kering in the mix, some industry observers found the Michele appointment surprising: Kering’s largest house Gucci and Michele suddenly parted ways in November 2022. “There are times when paths part ways because of the different perspectives each one of us may have,” Michele stated at the time.
Experts believe it’s unlikely that Kering wasn’t involved in the decision to hire Michele for Valentino. “Kering has an option to own Valentino fully eventually,” says Erwan Rambourg, HSBC global head of consumer and retail research. Last year’s agreement included the option for Kering to acquire 100 per cent of the share capital of Valentino no later than 2028. “So it’s not that Kering was consulted – they should be the ones to decide, to be honest. I think nothing is likely to happen at Valentino without Kering actually being in the decision seat or the co-pilot seat at least.”
“I can only imagine Kering and Mayhoola may have acted jointly, as partners in the brand,” Bernstein managing director Luca Solca says. Kering had no comment on their input in the decision.
The agreement, completed in November 2023, is part of a broader strategic partnership between Kering and Mayhoola, which could lead the Qatari company to become a shareholder in Kering and to explore “potential joint opportunities”.
Valentino has plenty of runway for growth. The Roman house reported sales of €1.4 billion in 2022, up 10 per cent compared to the previous year on a constant basis. (2023 numbers have not been published). “Valentino’s last published EBIT margin was low – 8.5 per cent – which supports their strategy of shifting to directly-operated retail versus wholesale,” says Bruno Roland-Bernard, professor of finance at Institut Français de la Mode. In its 2022 earnings statement, the company said its directly-operated retail generated 62 per cent of sales in 2022 compared to 54 per cent in 2019. Growth in its directly operated stores rose 21 per cent in 2022.
Valentino’s strength is ready-to-wear and couture. New accessories to complement the bestselling Rockstud range could benefit the business, experts say. Michele started at Gucci as an accessories designer (as did Pierpaolo Piccioli at Valentino). Couture will be new territory for Michele, although he created red carpet sensations during his era at Gucci. Fans and meme creators rejoice.
“Michele proved at Gucci that he was a great storyteller with a transversal vision across product categories. In that sense, we can hope for a story that’s at least as beautiful as the one Pierpaolo Piccioli has told through couture and ready-to-wear since 2016,” says Mathias Ohrel, founder of M-o Conseil, a recruitment company for the creative and cultural industries.
Michele is an omnipotent creative director, à la Hedi Slimane. At Gucci, whose beauty licence is owned by Coty, Michele was very involved in the fragrances – an opportunity for Valentino. In its 2023 annual earnings statement, L’Oréal cited Valentino among brands that “made strong growth contributions” with the Born in Roma by Valentino fragrance among “worldwide blockbusters”.
There’s more Kering crossover beneath the appointment: Valentino CEO Jacopo Venturini and Michele worked closely together at Gucci. Venturini was Gucci executive vice president of merchandising and global markets before joining Valentino as CEO in 2020. The pair, with then-CEO Marco Bizzarri, contributed to the meteoric growth of Gucci. Can they replicate that at Valentino and scale up?
“I am certain that the reinterpretation of the maison’s couture codes and the heritage created by Mr Valentino Garavani, combined with Alessandro’s extraordinary vision, will bring us moments of great emotion and will translate into irresistibly desirable objects,” Venturini stated.
“With Michele’s track record and enormous following, he has the potential to trigger rapid growth acceleration and market share gain,” says Mario Ortelli, managing director of Ortelli Co. Michele’s resurgence in Kering’s world comes as Gucci’s star has declined. Kering issued a sales warning in March that the brand’s comparable sales were expected to slump 20 per cent in Q1. Are there any risks of Valentino grabbing market share from Gucci?
Rambourg doesn’t think so: “Valentino has a pretty unique voice in the fashion industry, on colour, femininity. We were always quite favourably inclined, when it was the case that Kering was taking a stake. Obviously, it’s always better for us if you have 100 per cent rather than 30 per cent, but that’s probably going to be the end game anyways. I don t think it’s an issue for Valentino to be part of the Kering stable of brands. I think it has a sufficiently distinctive voice to fit in quite well, actually.”
Valentino also fits in the Kering ethos. In 2022, the house decided to go fur free, a decision that Kering made in 2021. Valentino has also pursued a brand elevation strategy under Venturini, which is in line with the strategy that Kering is deploying across its houses to target a high-end luxury clientele.
“Alessandro Michele is a mega-talent,” says Solca. “His revival of Gucci will go down into the industry history books. Provided he can find a new Valentino specific style — and not copy and paste the former Gucci aesthetics onto Valentino — the impact for Valentino can be very positive indeed. Valentino needed new ideas and new creative energy. Alessandro has potentially plenty of that.”
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