Gucci announce departure of CEO, sending shares in parent company higher

Kering SA shares rose the most in eight months on optimism that the departure of Gucci Chief Executive Officer Marco Bizzarri will mark a step toward reviving the once high-flying Italian label.

Bizzarri, who’s been running Gucci since 2015, will depart on Sept. 23, Kering said Tuesday. He’ll be replaced by Jean-Francois Palus, currently group managing director, who’ll lead the brand for a transitional period.

Bizzarri’s departure comes after growth at Gucci — which accounts for about two-thirds of Kering’s profit — lagged behind rivals in recent years. Its previous creative director, Alessandro Michele, left in November and was replaced by Sabato de Sarno, who’s scheduled to unveil his first collection for the brand in September.

Palus, described by Kering CEO Francois-Henri Pinault in the statement as his right-hand man and daily sparring partner, will focus on strengthening Gucci’s teams and operations to revive the brand’s momentum. Palus will relinquish his position on Paris-based Kering’s board and relocate to Milan.

The shares jumped as much as 6.8 per cent in early Paris trading.

Evolution

The management changes are “not a Big Bang but a logical evolution,” Citigroup analyst Thomas Chauvet said in a note. The moves will improve decision-making and show a determination to transform Gucci, he added.

Kering has been trying to boost the appeal of its biggest brand after clients tired of Michele’s flamboyant and eccentric designs. It’s expected that De Sarno’s debut collection will be available in stores early next year.

Another priority is to lure back shoppers in China. Gucci has already taken steps to overhaul management there after naming Laurent Cathala to oversee the brand’s fashion operations in that country. But Kering has said that a fix won’t happen overnight.

Kering’s stock this year has trailed gains of more than 25% at LVMH Moet Hennessy Louis Vuitton SE and Hermes International. Pinault said the shakeup is aimed at fully capturing the growth of the global luxury market, which has helped make LVMH the most valuable company in Europe.

Early Successes

Under the early leadership of Bizzarri and Michele, Gucci’s revenue more than doubled between 2015 and 2019, and the brand’s popularity on Instagram — the go-to social media platform for fashionistas — also boomed. But the pandemic brought an end to the years of soaring growth at the Italian label.

Kering has suffered of late not only from a slowdown at Gucci but also sluggish sales at Balenciaga. That brand’s performance was hurt after an ad campaign late last year was perceived as sexualizing children, prompting an apology from the label.

As part of a wider reorganization at the top of Kering, Francesca Bellettini, the CEO of Yves Saint Laurent, will take on the additional role of group deputy CEO, with all the brand’s chiefs reporting to her. A new top management for Yves Saint Laurent will be eventually put in place, Kering added.

Jean-Marc Duplaix, Kering’s chief financial officer, will also become a deputy CEO, overseeing operations and finance.