Kering shares dropped sharply on Friday morning after the group led by Francois-Henri Pinault chose to bet on subversive in-house talent Demna to reinvigorate its Gucci label rather than hiring a big-ticket name from fashion’s overheating jobs market.
Shares fell by around 12% in early Paris session trade compared with little movement in those of luxury peers following the appointment of the 43-year-old Georgian Balenciaga designer as Gucci’s next design chief.
The fashion world had been eagerly anticipating news of the replacement for Italian Sabato de Sarno, fired by Gucci in February after less than two years in the role.
Although widely praised for his streetstyle-inspired looks and attention-grabbing showmanship at Balenciaga, many analysts said Demna – known by one name – was a risky pick for much larger label Gucci with its reputation for timeless elegance.
Analysts at Jefferies said Demna’s appointment came as a surprise, while J.P. Morgan analysts called the move a “controversial choice,” citing early feedback on social media and fashion blogs and a “question mark” now hanging over the brand’s creative future.
Barclays analysts said choosing Demna rather than a famous external candidate like Hedi Slimane or Pier Paolo Piccioli – two of the most-cited names by fashion watchers for the job – was an attempt to make the label a global trend setter again.
“We think that at this stage, the announcement brings as much risks as opportunities,” they said in a note.
Gucci’s prolonged sales decline, including a drop in revenue by 24% in the fourth quarter of 2024 alone, has heavily weighed on Kering, with group shares down around 40% year-on-year while a European sector benchmark index (.STXLUXP).
The group also recently lost Matthieu Blazy, its star designer at Bottega Veneta, who left to lead Chanel.
Sacking de Sarno was the first major decision under Gucci’s new chief executive, Stefano Cantino, who took over the helm in January.
De Sarno’s shift to minimalist and more timeless styles failed to gain traction with shoppers.
Kering executives said last month De Sarno helped the century-old label shift its focus back to more classic elegance, leaving a clean slate for his successor.
Demna now needs to crack the code how to redefine Gucci’s artistic direction and reinvigorate shoppers and retail buyers in Europe, the United States and China which has been a struggle for the label since Alessandro Michele’s departure in 2022.
The fact he is set to take over the helm only in July also raised questions.
“It is unclear whether his imprint on the brand will already be evident at Gucci’s September Milan fashion show. Or whether we will have to wait until 2026” Jeffries analysts said.
The latest in a string of top moves in luxury fashion came only hours after as Versace’s main designer on Thursday, with Dario Vitale taking over.
At Balenciaga, Demna had also sparked a major backlash in 2022 over ad campaigns involving children, which he later said was the Kering kept him in the role, where he carefully managed the brand’s exposure and ramped up its sales.
By Tassilo Hummel, Piotr Lipinski and Mimosa Spencer
Learn more:
Why Gucci Picked Demna
The era-defining Balenciaga designer will take the reins of Italy’s biggest luxury brand in a surprise shakeup of parent company Kering’s creative ranks. The French group is under pressure to turn around performance after profits tumbled 46 percent last year.
