Creative director changes are on the cards at Kering’s Gucci and Balenciaga, and at other brands, Miss Tweed has found out.
misstweed.com
The arrival of Italian designer Alessandro Michele at Valentino, replacing longstanding Pierpaolo Piccioli, as predicted by Miss Tweed on Monday and confirmed on Thursday, is one of many creative tectonic shifts that will take place among major fashion brands over the next few months, industry insiders say.
The downturn in luxury spending in the United States and Europe, coupled with weaker than expected demand in China, is forcing controlling shareholders to take drastic action and hire new talent in the hope that this will help their brands regain luster and traction.
These are tough but necessary decisions in the current economic environment. The post-pandemic boom is well behind us. Interest rates and inflation remain high. Consumers seek value for money and are reluctant to splurge on brands that lack innovation and no longer feel relevant. Hence, creative director changes are on the cards at Kering's Gucci and Balenciaga, and at other brands, Miss Tweed has found out.
Reading this will not please investors,
but Kering will probably have to part ways with Sabato De Sarno this autumn if the 40-year-old designer is unable to create excitement around the brand and make its sales rise again by then, industry sources predict. It would take some time for a replacement to make a difference - assuming Kering finds a suitable one - further weakening the group.
Many investors question Kering's growth strategy and find its current governance puzzling. Kering's share price is 40 percent lower than a year ago and less than half its peak in summer 2021. It is the worst performer in the Premier League of listed luxury groups. François Pinault, the 87-year-old father of the Kering CEO, François-Henri Pinault, is concerned about the future of the group he founded as a timber company in 1962 and, rightfully so, people close to him ask: What is his son doing?
Fixing Gucci needs to be Kering's number one priority. Gucci accounts for the bulk of the group's revenue and profits. It is its cash cow, as is Louis Vuitton for its arch-rival LVMH. The brand steadily declined after the pandemic when Marco Bizzarri, who was CEO, lost the talent that made the brand the industry's biggest success story, more than doubling its size between 2015 and 2019.
The exodus was partly a result of Bizzarris authoritarian management style, as Miss Tweed reported last year. As performance worsened and tension rose, Bizzarri sacked Alessandro Michele in November 2022. Bizzarri got the boot himself seven months later, in July 2023, as Kering realized he was no longer the right boss for the brand.
Last year, investors realized with stupefaction that Kering had not planned Michele's or Bizzarri's succession. The group hurriedly hired Sabato De Sarno, who was not their first choice, and appointed Group Managing Director Jean-François Palus as the new CEO of Gucci. Palus is no brand-builder or storyteller, but he is the most trusted friend and associate of François-Henri Pinault. Palus was supposed to be interim CEO, but Pinault said at its annual results in February that he was not planning to replace him for now.
That position may not be tenable for long.
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