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With the sheer amount of executive changes at major luxury brands over the past few years, it might seem as if retailers have been playing a game of revolving doors. And now, a key player has joined the game. Earlier this month, Kering named Luca de Meo as CEO, replacing longtime chief executive François‑Henri Pinault, who will stay on as chairman.
The switch came as a surprise but not a total shock as sales at the conglomerate have been on a downward spiral with Gucci—the linchpin of Kering’s revenue—underperforming since 2022.
However, Kering’s stocks were up ~12% as news of de Meo’s potential appointment spread before the official announcement, indicating a positive response.
“The appointment of Luca de Meo as CEO of Kering is both bold and appropriate, as it signals…Kering is in a turnaround and has selected an experienced turnaround executive (who also has luxury brand experience) to lead that turnaround…Fresh new thinking is being brought to the company and industry,” Bret Bero, assistant professor of practice in management at Babson College, told Retail Brew via email.
Although investor optimism is strong, de Meo certainly has a tough task ahead—turning around a company that has faced significant financial challenges and a “75% drop in its value since the summer of 2021,” per Reuters.
All eyes will be on Kering’s new leader, who officially takes the reins at the company in September. But if there is anything to cast doubt on the Milan-born executive’s ability to be able to transform Kering, however, it’s his much talked about “outsider” status.
The Bocconi University graduate is most well-known for his impressive tenure as an automotive leader with key roles at Fiat, Toyota, and most notably Renault, where he was responsible for what was called a “Renaulution,” aimed at restoring profitability and steering the company toward EVs and software-defined vehicles.
While de Meo may not have much direct luxury experience, his strategic expertise may be just what Kering needs.
“I think it’s a terrific, albeit seemingly unconventional choice bringing him in from outside the world of luxury and fashion,” Michael Prendergast, managing director in the consumer and retail group of Alvarez & Marsal, told Retail Brew. “de Meo has had a successful background in brand management and marketing, which should play well for him in the new role.”
Bero agreed, adding that it might be unfair to label de Meo as simply an “automotive guy.”
“He has experience with highly recognized luxury brands, such as Lamborghini, Ducati, and Alpha Romeo, as well as mass market brands; he has experience turning around deeply troubled brands, such as when the Fiat 500 Abarth helped save Fiat and relaunch the Abarth brand and the basis of that Fiat turnaround was on revitalizing an iconic brand,” he said, adding,“It is reasonable for Kering to have a sense of urgency…and look outside the fashion industry for a turnaround leader with brand experience.”
And while it might be too early to predict how de Meo’s tenure at Kering will play out, Prendergast believes it will certainly shake things up at the company.
“This is perhaps necessary to help jump start a business like Gucci,” he said. “Outsiders are not tethered to political requirements either and at the beginning of their term often have the political capital to make the boldly needed moves that in certain cases could be very obvious, but for whatever reason have not been implemented.”
He added that de Meo’s appointment is likely also a reflection of a broader trend in the industry to “bring in newness,” both in terms of creative thinking and strategy.
“Luxury has been on a decades-long growth cycle that has more recently slowed, so disruption is needed across the board,” Prendergast said. “One way to do this is to bring unconventional leaders in. These trail blazers should help stimulate the necessary changes to set the luxury houses up for another growth cycle.”