Kering's Stock Climbs on Luca de Meo's Expected CEO Appointment
Shares of French luxury conglomerate Kering jumped 7.2% early Monday following reports that Luca de Meo, an industry outsider from the automotive sector, is set to take the helm as the group's new CEO. This development marks a pivotal moment as Kering seeks to revive its portfolio, which includes flagship brands like Gucci and Saint Laurent.
From Automotives to Luxury: De Meo's Career Shift
The announcement coincided with the confirmed departure of de Meo as CEO of Renault. The French automaker stated he stepped down "to take on new challenges outside the automotive sector." Known for his strategic acumen, de Meo has spent over 30 years leading major automotive companies including Fiat and Renault, and is credited with spearheading Renault's impressive turnaround, boosting its share price by more than 90% during his tenure.
Investors React and Analysts Weigh In
Following these reports, Kering's shares surged to over 7%, whereas Renault's stock declined approximately 7%. Experts point out that de Meo's strengths in brand management and marketing align well with the demands of the luxury market. One analyst noted that his expertise could be instrumental in navigating Kering through its ongoing challenges.
Challenges Ahead for Kering and Its Luxury Brands
Despite de Meo’s impressive track record, Kering faces significant hurdles. Gucci, the crown jewel of the group contributing nearly half of its revenue, has struggled amid shifting consumer preferences, contributing to a sharp decline in Kering's stock, which has lost more than 60% over the past two years. This drop reflects repeated profit warnings and shifts in creative direction.
Current CEO and chairman François-Henri Pinault, part of the family controlling Kering, has held leadership roles for two decades and is reportedly preparing a succession plan that may include separating the CEO and chairman positions. It remains unclear if Pinault will continue as chairman.
Luxury Turnarounds Are Complex
Industry analysts stress that reviving luxury brands has become increasingly complex and costly, requiring substantial long-term investment to meet evolving consumer tastes. One senior equity analyst emphasized that rejuvenating Gucci and Saint Laurent will demand persistent effort to restore consistent revenues and cash flow, which could, if successful, significantly boost Kering’s market valuation.
Recent Performance Reflects Industry Headwinds
In April, Kering reported a disappointing 14% year-over-year sales decline in the first quarter, citing macroeconomic challenges. Gucci, accounting for a substantial portion of the group's revenue, led the downturn with a 25% drop on a comparable basis, underscoring the urgency for strategic change.
Looking Forward
Luca de Meo's appointment marks a fresh chapter for Kering, as the company seeks to reinvigorate its luxury brands and regain investor confidence. With his proven ability to steer complex corporate turnarounds, many are watching closely to see how de Meo will translate his automotive leadership success into the luxury fashion arena.
