Kering shares fell 2 percent Friday following the news that the top team at Gucci was exiting.
The French luxury goods conglomerate saw its shares drop to 155.65 euros, or $193.18 at current exchange, in trading on the Paris Bourse.
Kering had revealed early Friday that Patrizio di Marco, Gucci’s chief executive, and Frida Giannini, its creative director, were out. Giannini will step down from her role at the end of February after showing her fall-winter 2015 collection on Feb. 25 in Milan, and di Marco is to exit on Jan. 1 after six years at the management helm.
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The news sparked a guessing game as to who could succeed Giannini. Speculation has long been focusing on Givenchy’s creative director Riccardo Tisci, whom sources continue to say heads up the list of potential candidates.
Asked about Tisci, a Kering spokeswoman said, “We never comment on rumors. All I can say is the recruitment is under way.”
LVMH declined to comment on the Tisci speculation.
Other sources suggested Joseph Altuzarra could be an internal possibility. Kering took a minority stake in his New York-based fashion house last year and the designer has sat front row at the Gucci show.
Marco Bizzarri, named chief executive of Kering’s luxury couture and leather goods division last April, is to succeed di Marco at the helm of the Florentine house.
“There is no change in terms of strategic approach for Gucci. We will continue to pursue the implementation of the brand elevation strategy,” Francois-Henri Pinault, chairman and ceo of Kering, told WWD.
“Marco’s expertise, but also his knowledge of the Kering group, makes him the perfect choice to build on Gucci’s extraordinary legacy to lead the brand to a new momentum,” Pinault added.
Kering shares were trading down 1.5 percent at 156.50 euros, or $194.56, shortly after Friday’s opening on the Paris Stock Exchange. The CAC 40 was down 0.7 percent.
Bizzarri, who piloted Bottega Veneta, Kering’s most upscale leather goods brand, before his April promotion, should offer a steady hand to Gucci, which is trying to reinvent itself with fewer logo products and stem sliding sales in China.
Gucci’s sales slipped 1.6 percent to 851 million euros, or $1.13 billion, in the third quarter, eclipsed by smaller, but more dynamic brands in the conglomerate, especially Saint Laurent, helmed by French fashion star Hedi Slimane and tracking a 27.6 percent gain in the period.
Asia Pacific represents a particular challenge for Gucci, precipitating a management shakeup in the region. Sales there declined 5 percent in the third quarter, reflecting the disruption of pro-democracy demonstrations in Hong Kong and Macau.
Merinda Yeung, previously general manager of Gucci in Taiwan, was promoted to president of Gucci in Greater China, effective in January. She succeeds Carol Shen, an Estée Lauder veteran who had joined the Italian brand in mid-2012.
Before Gucci, Yeung had worked for Chanel in Singapore and Louis Vuitton in Tawian, Hong Kong and Vancouver.
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Announced in October, Gucci noted its new structure for the Asia-Pacific region, excluding Japan, would allow headquarters to work more directly with the respective markets and ensure the “effective implementation” of its strategy.
Kering has trumpeted more positive trends in directly operated stores in North America and Japan — up 8 percent and 4 percent, respectively, in the third quarter — underlining the success of Gucci’s “brand elevation” strategy, hinged on more leather products.
The company cited “solid trends” in handbags, which represent 32 percent of retail sales, fanned by the new Swing and Bright Diamante lines, with the Jackie Soft also showing promise. It also touted double-digit growth for Giannini’s fall ready-to-wear and noted men’s and women’s shoes “grew nicely.” Small leather goods and luggage were in negative territory.
Thomas Chauvet, luxury analyst at Citi, said in a report that he expects Gucci’s new designer to confirm the brand elevation strategy initiated several years ago (more leather/no logo, less canvas/logo)” and to “drive a re-acceleration in sales following two years of subdued growth and five quarters of flat to negative trends. We expect minimal operational disruption near-term.”
Chauvet forecasts a “moderate improvement” at Gucci in the fourth quarter: up 1 percent versus declines in the last two quarters. The bank estimates that the Gucci brand will account for about 35 percent of Kering’s sales and 60 percent of group operating profits for full-year 2014.
He trumpeted Bizzarri’s tenure at Bottega Veneta, which “enjoyed one of the most exceptional growth stories in the luxury industry in the past decade.”
“This was a change that was a long time in the making,” said analyst Luca Solca, managing director of equities and head of luxury goods at Exane BNP Paribas. “Di Marco and Giannini have presided over Gucci for a whole era, taking it to new heights. It is in the nature of the business that managers go, and brands remain. Gucci is one the most prominent luxury mega-brands. It will benefit from new ideas and fresh energy. The key to stay relevant in luxury goods is continuing reinvention. Marco Bizzarri is a proven team builder and a very good manager. He could take over the great work Patrizio had done at Bottega Veneta, and bring the brand to new heights. We expect he is setting himself up to do the same at Gucci. With Bizzarri, we also see low risk of a ‘kitchen sink’ brand reset.”
At Gucci, di Marco and Giannini, who are also a couple and have a daughter together, highlighted Italian artisanal craftsmanship, raised the luxury content and reworked several of the brand’s staple and archival designs.
Giannini joined Kering more than 12 years ago, becoming head of design for leather goods in 2004. She was appointed sole creative director in 2006. Pinault thanked Giannini for “her extraordinary passion, dedication and contribution” to Gucci. He underscored how being the creative director for close to a decade was “a remarkable accomplishment.”
Bizzarri joined Kering in 2005 as ceo of Stella McCartney and was appointed ceo of Bottega Veneta in January 2009.
Pinault will take on Bizzarri’s role as ceo of Kering’s luxury division in the interim. Reporting to Pinault as ceo of Gucci, Bizzarri is to continue the brand’s “elevation strategy to continue to strengthen [its ] international growth, reinforce its unique positioning and develop the iconic Florentine house throughout the changing world of luxury,” according to Kering.
Pinault also thanked di Marco, saying, “The great performances achieved by the Gucci brand during his tenure stand as a testament to his success. His strategic vision, passion, dedication and charisma were key to bring Gucci where it is today.”
Giannini and di Marco have just returned from trips to Japan and Russia, capping off a year of travels that included stints in the U.S. and Brazil.
During his trip to Tokyo in November, di Marco maintained that the Italian brand was on the right track in terms of its repositioning efforts and working to boost its competitive edge over rivals. Di Marco and Giannini at the time both reiterated their denials that they plan to go anywhere soon — at least of their own volition.
The double departure at Gucci echoes what transpired in 2003, when Tom Ford and Domenico De Sole — the dynamic duo who built Gucci into one of fashion’s hottest houses and built a luxury conglomerate around it — resigned.
Earlier this month, Michele Sofisti, ceo of Gucci watches and jewelry, also left the company. Di Marco was to take over his duties in the interim.