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The news of a major management reshuffle at Kering sent the luxury company’s share price up nearly 7 per cent on Wednesday, with industry observers and analysts keen to hear what the top management has to say during next week’s earnings about what’s next for the luxury conglomerate. However, without a permanent fixture replacing Marco Bizzarri at Gucci at a pivotal moment for new designer Sabato de Sarno, is a tricky transition ahead?
“The market is not applauding the departure of Marco Bizzarri from Gucci,” says Mario Ortelli, managing director of Ortelli Co. “Investors see the shakeup as a sign of commitment of Kering to the success of Gucci.”
As part of an executive shakeup, Bizzarri is out and Francesca Bellettini has been promoted to the role of Kering deputy CEO, in addition to her current role as CEO of Saint Laurent.
Senior analyst for luxury goods at consultancy Bernstein Luca Solca agrees: “Some investors may have seen the previous situation as compromised, hence they applaud Gucci potentially turning the page. Yet, undeniably, the risk profile of the Gucci relaunch increases after the changes just announced.”
“We said [a change of CEO] would be the catalyst for some investors to look at the stock again,” says HSBC analyst Aurelie Husson-Dumoutier. “It’s a move towards the right trajectory that a lot of investors were asking for.”
Former high-flier Gucci has lost steam since 2020, and a new strategy announced at Kering’s Capital Markets Day in June 2022 has yet to bear fruit. Therefore, a management change at Gucci was not totally unexpected. However, the timing of the announcement before the debut collection of the new creative director Sabato de Sarno at Milan Fashion Week took the industry by surprise. To recap: Kering announced that Gucci CEO Bizzarri will exit the company effective 23 September, and Jean-François Palus, currently Kering Group managing director, will succeed him for a transitional period. The group also appointed two Kering deputy CEOs: Francesca Bellettini (in addition to her current role as CEO of Saint Laurent) will be in charge of brand development and Jean-Marc Duplaix, the current CFO, will oversee operations and finance.
Bizzarri joined Kering in 2005 as president and CEO of Stella McCartney. From 2009 to 2014, he was president and CEO of Bottega Veneta, where he was instrumental in growing the brand’s sales and recognition, according to Husson-Dumoutier. He then served as CEO of the Kering couture and leather goods division. He has been Gucci CEO since 2015 and “has spearheaded Gucci’s once-in-an-industry turnaround” as Berstein analysts put it.
“Gucci is clearly underperforming peers now but prior to that, the Michele-Bizzarri duo had done miracles in terms of turning the brand around,” says Husson-Dumoutier. “Gucci was a fantastic success story. Probably one of the reasons why Gucci has started to lose market shares in 2020 was Kering’s decision to lower marketing investments when Covid hit. Among the issues that they had, they faced some issues in China, not being able to recruit during the Covid years.” Gucci poached Tiffany executive Laurent Cathala in April 2022 to lead the Greater China fashion business. The new strategy announced in 2022 involved the elevation of the brand as well as the appointment of Maria Cristina Lomanto to the new role of EVP, brand generation manager.
After the departure of previous creative director Alessandro Michele in November, Bizzarri was expected to lead the next chapter of the house with De Sarno, who was appointed in January. Bizzarri said at the time of the announcement that De Sarno’s vision “will help write this exciting next chapter, reinforcing the house’s fashion authority while capitalising on its rich heritage”.
Palus’s role as interim CEO is particularly high stakes. Gucci represented 52 per cent of the group sales in 2022 and 67 per cent of the EBITDA (earnings before interest, taxes, depreciation and amortisation).
“My logical conclusion from Palus being appointed is that Kering has yet to identify the “right” CEO for Gucci to be appointed down the road,” observes Solca. “I see two options here. One, maybe Francesca Bellettini steps in once a valid replacement for her is found for Saint Laurent. Two, an external recruit is appointed. Many, I’d expect, would love to run Gucci. A natural candidate in my opinion — and one of the architects of the previous relaunch — would be Jacopo Venturini.”
Venturini has been CEO of Valentino since 2020. Before leading the Qatar-backed, Mayhoola-owned brand, he was executive vice president merchandising and markets at Gucci, and contributed to the successful run of the house, alongside Bizzarri and Michele.
“Speculation abounds as to who will be leading the turnaround now. Saint Laurent CEO? Chanel’s ex-CEO [Maureen Chiquet]?” Bernstein analysts wrote in a note Wednesday. Kering announced on Tuesday that its board has appointed Chiquet, global CEO of Chanel between 2007 and 2016, independent director. She will join Kering’s board in September 2023. “Her varied professional experience, her in-depth knowledge of our sector and her international background will be undeniable assets in enriching the diversity of our board s profiles,” Kering chairman and chief exec François-Henri Pinault said.
Another potential contender to lead Gucci according to industry analysts include Robert Eggs, who is chief business strategy and global markets officer at Moncler Group and previously worked at Louis Vuitton. Kering declined to comment on speculations.
An outstanding question for Kering’s future is how the company’s newly minted co-deputy CEOs will function. All brand CEOs will report to Bellettini, Kering said in its statement on Tuesday. A spokesperson for the group confirmed that they include the CEO of Gucci, and even jewellery brands such as Boucheron. Bellettini will “gradually assume her new responsibilities [as Kering deputy CEO] over the coming months and a new Yves Saint Laurent top management lineup has been put in place”, the Kering release said. Kering doesn’t provide details on the timing of the appointment of a new CEO at Saint Laurent.
“Details about the new organisation would be welcome since Francesca Bellettini has been instrumental in the stellar performance of the brand in the past years and her departure could raise some questions about the brand growth trajectory,” HSBC analysts wrote in an email to investors on Tuesday night.
Kering is to report its first half earnings on 27 July. A VisibleAlpha consensus expects Gucci to grow 3.7 per cent in the second quarter of 2023.
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