For Luca de Meo, the challenge ahead at Kering is nothing short of titanic. Although markets see the appointment of the former Renault CEO as good news for the luxury sector and bad news for the automotive industry — unable to retain its top talent — there is great anticipation and curiosity around his next moves. From potential job cuts (as he implemented at Renault) to interventions aimed at optimising the supply chain, all eyes are on de Meo and his upcoming “to-do” list.
First moves
Investors and creditors are eager to know whether Kering’s leadership team will undergo a shake-up. François-Henri Pinault will remain as chairman, with Luca de Meo stepping in as the new CEO, supported by Francesca Bellettini and Jean-Marc Duplaix, who for now will retain their positions as deputy CEOs. Attention is also focused on potential reinforcements for Gucci’s management team, according to WWD.
De Meo’s appointment will be effective from 15 September. Kering and its shareholders are hopeful he can replicate his success at Renault, where in just 18 months the car manufacturer returned to growth and profitability — thanks in part to significant staff cuts. “We will not slow down the action plans defined for 2025”, Pinault stated, justifying the decision by saying the company “needs someone with a fresh vision, a new perspective on the luxury market”, Business of Fashion reports. Kering wants to be the first to embrace this new outlook. Pinault also highlighted de Meo’s expertise in supply chain management, commenting: “He will certainly bring new ideas, a new vision to that area of the business”.
The analysts’ view
“De Meo’s experience in turning around a French company will be particularly valuable for Kering: he is likely to be more willing to make tough decisions than current executives who rose through the ranks internally”, wrote Piral Dadhania, analyst at RBC Capital Markets. But the task ahead is anything but simple. Thomas Chauvet from Citi noted: “There is still a lot of work to be done at Gucci and Saint Laurent to rejuvenate both brands and deliver a steady flow of revenue and cash for the group”. Luca Solca of Bernstein echoed this, stating: “Luca de Meo faces a titanic challenge”.
Three key objectives
It’s a challenge with three major goals. First, to revitalise the brands — bearing in mind that all current appointments at Gucci, Balenciaga, and Bottega Veneta predate de Meo, as Erwan Rambourg of HSBC pointed out in Vogue Business. The second is to address Kering’s mounting debt. The third is to review the group’s portfolio. One question is whether he’ll revisit the agreement with Mayhoola for Valentino. “We now have a leader coming from the automotive sector. Does this mean we’re open to doing things slightly outside the core of luxury?” Rambourg asked. “Or, on the contrary, does it mean we are losing our way? What will Kering’s portfolio look like in 10 years compared to today?” the analyst concluded.
Photo: Kering
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