France's luxury group Kering has welcomed former Renault chief executive officer (CEO) Luca de Meo as its new head, and de Meo signaled a restructuring. The company plans sweeping changes to make up for weakness at key brands such as Gucci and Saint Laurent.
According to the Financial Times (FT) on the 9th (local time), de Meo was officially appointed CEO at the shareholders meeting and signaled change and innovation through restructuring of underperforming brands. He said, "I came to Kering with an open mind, and I will focus on change without prejudice," adding, "Situations will arise where we must make clear and strong decisions, and that will not always be easy." CEO de Meo plans to make core brand-related decisions within this year and present a new strategy next spring.
Luca de Meo, born in 1967 in Milan, Italy, began his career at Renault in 1992 and has worked in the auto industry for more than 30 years. Starting at Renault, he went on to Toyota Europe and Fiat, and in 2009 joined the Volkswagen Group as chief marketing officer. From July 2020, he returned to the Renault Group as CEO.
The appointment appears to be a major turning point in Kering's management. Previously, founder François-Henri Pinault had held both the CEO and chairman posts for 20 years, but going forward Pinault will focus solely on the chairmanship while de Meo leads the company as CEO.
The luxury industry has remained in a prolonged slump since the COVID-19 pandemic. Demand for high-end bags and watches has cooled, and so-called "quasi-luxury consumers" have left in droves due to price hikes. Kering posted a double-digit decline in sales last year due to weakness at core brands including Gucci and Saint Laurent. In particular, Gucci, which accounts for two-thirds of the group's revenue, took a direct hit to sales as former creative director Sabato De Sarno, unlike his predecessors, was seen as failing to boost the brand's buzz.
Even after that, Kering fueled investor anxiety with excessive real estate investments and mergers and acquisitions (M&A), and in March it sparked controversy by hiring Demna Vazalia as Gucci's new creative director. Vazalia, who launched the street brand Vetements, drew industry attention with his distinctive sensibility in each collection, but questions arose over whether he was a fit for Gucci, and Kering's share price fell 12% right after his appointment. Kering's current market capitalization is 28.8 billion euros (about 4.67663 trillion won), and its share price has halved over the past two years.
CEO de Meo appears to be winning shareholder confidence. At this shareholders meeting, he received 98% of the votes in favor, finalizing his appointment. However, there was some controversy over the €20 million (about 32.5 billion won) cash-and-stock bonus he will receive, as the calculation method drew criticism even though it was justified as replacing compensation he would have received at Renault.
Even so, Kering's share price is rebounding with the arrival of the new CEO. Chairman Pinault said, "This appointment will be a decisive turning point for Kering," welcoming de Meo's addition, while the same day extending his own retirement age from 65 to 80, laying the groundwork for a long tenure.
Since taking over as Renault CEO in 2020, de Meo strengthened the product lineup and cut expenses, nearly doubling the share price, gaining recognition as one of France's most respected business leaders. Still, there is caution over whether he, who has no experience in the luxury industry, can turn around Kering's crisis.