Kering investors brace for more bad news after Gucci creative chief’s exit
French luxury group to report full-year results this week following latest blow to turnaround plans at its biggest brand
Adrienne Klasa in Paris
MONDAY 10TH FEBRUARY 2025
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Sabato De Sarno’s departure was announced on Thursday just two years after he was brought in to lead a creative revamp © AFP via Getty Images
Kering investors are bracing for more pain when the French luxury group reports results this week after the abrupt exit of Gucci’s creative director capped a testing period for the French luxury group. Sabato De Sarno’s departure was announced on Thursday just two years after he was brought in to lead a creative revamp at Kering’s biggest brand by sales and profits following years of flagging performance.
The move follows a tough 2024 in which Kering issued several profit warnings — a rarity in luxury — as sales and profits slid. Thomas Chauvet, analyst at Citigroup, said the change in creative leadership would “further delay a potential turnaround”, with 2025 set “to be another year of transition and a bit of a leap into the unknown”.
Barclays expects Gucci’s full-year organic growth to have fallen 21 per cent when the group reports full-year results on Tuesday. Group operating income is expected to have plunged 47 per cent to €2.5bn, according to Visible Alpha consensus estimates, while Kering shares have slid 38 per cent in the past year.
After outperforming peers between 2016 and 2020 as shoppers clamoured for previous star designer Alessandro Michele’s fashion-forward maximalist styles, Gucci’s sales have slumped as that aesthetic fell out of favour. Since Michele departed at the end of 2022 the brand has failed to regain its footing, weighing down its parent as it grapples with an industry-wide downturn in luxury sales.
De Sarno, a relative unknown when he was hired at Gucci, was tasked with creating more commercial products but his collections underwhelmed at a time when shoppers were already being more selective in their spending.
“From the beginning Sabato was set an almost impossible challenge. There was almost a cult around Alessandro that had become synonymous with what Gucci meant,” said one person close to the brand. “They read commercial as wearable . . . and looking at the product I thought I’d wear that, I just wouldn’t pay for it — it’s €3,500 for a basic jacket. If you saw it for €100 at Zara you’d buy it. But there was nothing that warranted the price tag”. Kering and Gucci declined to comment.
With Gucci’s transformation now on hold until a new creative director is named, Kering is also facing pressure on its balance sheet following several expensive acquisitions including perfumer Creed for €3.5bn and a €1.3bn building on Milan’s Monte Napoleone shopping street.
Net debt more than doubled from €3.9bn as of June 2023 to €9.92bn a year later. The group last month sold majority stakes in some of its prime real estate assets in Paris to private equity fund Ardian and has also recently sold two luxury outlet malls in Italy.
Behind the scenes, leadership at Kering started holding conversations with other designers as early as July, according to two people close to internal discussions. Investors and industry insiders were not surprised at De Sarno’s exit after six collections at the €10bn brand failed to translate into improved sales, but they were resigned to a long wait for Gucci’s revival.
“I was surprised at the relatively short period . . . but there has been no pick-up of the product among our clients,” said the head of one major high-end retailer. “This is going to knock them back at least a year and a half. What they need is to really clearly define the brand DNA, which has been lost.”
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