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Analysts’ Mixed Reception for Polet

PARIS — It just might work — or it could be a mistake.<BR><BR>That summed up the views of financial analysts, who had a mixed reaction Wednesday to Pinault-Printemps-Redoute’s surprise appointment of Robert Polet as the new head of...

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PARIS — It just might work — or it could be a mistake.

That summed up the views of financial analysts, who had a mixed reaction Wednesday to Pinault-Printemps-Redoute’s surprise appointment of Robert Polet as the new head of Gucci Group.

While some worried that Polet, a 48-year-old Dutch national with a reputation for increasing margins at the consumer goods giant, lacked experience in luxury and fashion, others said his outsider status could be an asset in the post-Dom and Tom era.

“Having someone not versed in the nitty-gritty of luxury brands may be good,” said one London-based analyst, who requested anonymity.

Analysts pointed to PPR’s reorganization of Gucci’s top management structure to allow its brand managers more decision-making leverage and clout in the running of their day-to-day businesses as setting the stage for the new Gucci chief executive officer. They said the appointment of Polet, who has wide experience in overseeing multiple brands, points to a ceo whose role will be focused largely on capital allocation, bolstering margins and cost-cutting at the group’s money-losing brands, such as Yves Saint Laurent and Boucheron, rather than on micromanaging the brands, as De Sole had done.

“The major challenge will be maintaining [the profitability] at Gucci while trimming back at the other brands in the portfolio,” commented a Paris-based analyst. “Polet’s arrival marks a shift at Gucci and is coherent with the strategy PPR has presented this far.”

The selection of Polet also is expected to signal a more laissez-faire attitude on the part of top management toward the design side of the luxury equation, after the strict image control wielded by Gucci’s departing creative director, Tom Ford.

“PPR seems to be saying that it wants a professional manager who will not have influence over the designers,” said another London-based analyst. “This might be a good change.”

The stock market greeted the news cautiously. PPR’s shares declined 1.27 percent to close at $102.84, or 85.70 euros, in trading on the Paris Bourse, as the CAC 40 index of French industrial companies fell .8 percent.

Analysts said Polet’s diverse background and cultural experience augurs well for his role at the international luxury firm. They said his facility with languages — including French, Italian, German and English — and his international background, having worked in Paris, Brussels, Milan and Hamburg, Germany, send a good message to investors.

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“It’s not negligible that he speaks Italian and French perfectly,” said a Paris-based analyst. “Gucci is staunchly Italian and PPR is resolutely French. That he’s Dutch is neutral. Some people at Gucci may not have appreciated the top man to be French and hence too close to PPR.”

They also said his credentials on an operational level were strong. “He has bags of experience when it comes to something like sourcing,” said one London analyst. “Polet will [however] have to get used to working in a high-margin top-end business, which is essentially the opposite of ice cream.”

Peter England, a Unilever veteran and former president and ceo of Elizabeth Arden, once a division of Unilever, called Polet strong on issues such as supply chain. “He can see the big picture,” said England. “His experience is also global.”

Meanwhile, analysts said Polet must quickly compensate for his lack of experience in retailing, which is vital to Gucci’s success and the bulk of its profitability. “He probably also has a lot of learning to do on the wholesale side of the business, which is built strongly on relationships with the department stores,” said a London-based analyst. “Domenico worked very hard to cultivate these.”

“Luxury is different than running a food business,” added Richard Hyman, chairman of Verdict Research, a London retail consultancy. “Then again, as the years go on, business is getting more challenging and you can’t necessarily run it from the pages of a manual. That’s why some companies are looking for managers who can bring a different perspective.”

— With contributions from Samantha Conti, London

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