French luxury group Kering is poised to recruit Luca de Meo, the CEO of French corporation Renault, as its new CEO. In a surprising move, the founding family, which has led the group for 20 years, is stepping back from day-to-day management as an external figure from the automotive industry takes the helm of the 'luxury giant.' Attention is drawn to whether Kering's departure from a tradition of family management and internal promotions will spark a trend of recruiting executives from 'non-luxury' backgrounds across the luxury industry.
According to foreign media including The Wall Street Journal (WSJ) on the 30th, Kering is set to appoint Renault CEO Luca de Meo as the group CEO on Sept. 15. François-Henri Pinault, son of Kering's founder and the company's chief for the past 20 years, will step down from the CEO position but remain as chairman of the board. The founding family has long managed the company, nurturing global luxury brands such as Gucci, Saint Laurent, and Bottega Veneta.
Historically, Kering has followed a practice of promoting executives with diverse in-house experiences or selecting individuals who have performed well in subsidiaries like Gucci and Saint Laurent for group leadership positions. During this CEO selection process, internal candidates such as Vice President for Brand Development Francesca Bellettini and CFO Jean-Marc Duplaix were also considered strong contenders. Given this tradition of prioritizing internal promotions and talent from subsidiary brands, the recruitment of an external figure this time has been viewed as unusual.
There is a backdrop of concerns regarding declining performance. Kering reported a 14% drop in sales for the first quarter of this year compared to the same period last year, recording 3.88 billion euros (6.21 trillion won). Last year's sales also declined by 12% year-on-year to 17.2 billion euros (25.89 trillion won), with operating profit falling 46% to 2.55 billion euros (3.84 trillion won) and net profit decreasing by 62% to 1.13 billion euros (1.7 trillion won). Kering's stock price has also dropped by about 70% compared to three years ago.
CEO de Meo is a business expert with over 30 years of experience in the automotive industry. He has held key positions at global automotive brands such as Toyota, Fiat, Volkswagen, and Audi. He joined Renault in 2020 and successfully led a major restructuring and innovation strategy called 'Renaulution.' At that time, Renault was in crisis, recording a net loss of 7.3 billion euros (11.5 trillion won) in the first half of 2020 alone.
CEO de Meo has revealed plans to focus on revenue and cash generation by 2023 and to strengthen Renault Group's product lineup and transform its business model into an innovation company centered on tech, energy, and mobility by 2025. He achieved his goal of reaching a 3% operating profit margin two years ahead of schedule. Since he took charge, Renault's global sales have turned around toward growth, and profitability has significantly improved. Last year, Renault sold approximately 2.26 million vehicles worldwide, marking a 1.3% growth compared to the previous year.
Global investment firm Bernstein noted, "De Meo now faces another massive challenge," adding, "Investors are watching what plans he sets and how quickly he can realize them."
Kering's decision coincides with broader changes across the luxury industry. Chanel appointed Leena Nair, a former Unilever executive, as its global CEO in 2022. Also, Switzerland's Audemars Piguet, one of the top five high-end watch manufacturers in the world, recruited Ilari La Resta as CEO in 2023, who has experience at P&G and a Swiss fragrance company.
The successive recruitment of executives from industries traditionally distant from luxury, such as consumer goods, IT, and automotive, is interpreted as a commitment to introduce innovative management strategies and new perspectives. This is seen not only as an extraordinary measure to respond to the crisis but also as a recognition that it is time for luxury brands to attempt a new leap amid digital transformation and changes in global demand.
An industry insider stated, "Efficient supply chain management, cost structure innovation, and digital transformation experience in the consumer goods sector can aid in improving the operational framework of luxury brands," adding, "Moreover, bringing in external talent can act as a catalyst for internal change in a luxury sector traditionally marked by strong heritage and a closed culture."
However, some voices express concerns regarding the hiring of CEO de Meo at Kering. An industry insider remarked, "In the automotive sector, success is heavily influenced by industry scale, efficiency, and engineering excellence, while high fashion is more affected by narrative and cultural characteristics," stating, "The abilities and virtues that a leader must possess differ."
Citibank stated in a report that "Kering will need a long journey to regain the momentum of Gucci and Saint Laurent and secure steady growth and cash flow," adding, "Revitalizing underperforming brands is complex and expensive, with consumers gravitating towards the leading firms in the luxury industry."