Gucci’s new era under Demna sends Kering shares tumbling

Kering’s stock plunged 12.4% in early trading today — its worst single-day performance since 2008 — following the announcement that Demna Gvasalia will take over as Gucci’s artistic director. Market reaction signals investor uncertainty about this bold leadership change at the luxury giant’s flagship brand. Known professionally by his first name, Demna will transition from his role at Balenciaga to Gucci starting July this year, marking a significant internal repositioning within Kering's portfolio of luxury houses. Struggling brand performance behind decision This appointment comes at a critical juncture for Gucci, which has struggled with declining relevance and disappointing financial performance, contributing to Kering’s 44.33% stock price decline over the past five years. Gucci reported a troubling 24% year-on-year sales drop in Q4 2024, with revenue falling to 1.92 billion euros ($2.1 billion) amid weakening demand, particularly in the crucial Chinese market. "Demna’s creative power is exactly what Gucci needs," stated François-Henri Pinault, Kering’s CEO, expressing confidence in the designer’s ability to reinvigorate the storied Italian fashion house. Industry observers note that Demna’s appointment represents a striking shift in strategy, as he becomes Gucci's first non-Italian creative director since Tom Ford’s transformative tenure in the 1990s. Known for his innovative streetwear aesthetics and cultural provocations at Balenciaga, Demna faces the formidable challenge of reconnecting Gucci with luxury consumers who have increasingly embraced understated elegance over maximalist fashion. Investor concerns mount about interim performance Analysts highlight the urgency of Gucci’s situation, noting that the brand needs swift creative reinvention. However, with Demna not starting until mid-2025, his creative vision may not materialize in collections until 2026, raising questions about Gucci's performance in the interim. This leadership change follows a period of instability at Gucci, with Demna replacing Sabato De Sarno, whose brief tenure came after Alessandro Michele’s seven-year run ended in 2022. Industry experts suggest this appointment represents Kering’s most consequential strategic move in years as it attempts to restore growth at its most profitable brand.

Gucci’s new era under Demna sends Kering shares tumbling

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Published March 14, 2025

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Gucci’s new era under Demna sends Kering shares tumbling