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This story first appeared in the December 15, 2014 issue of WWD. Subscribe Today.

The fashion direction it will take is the question Gucci faces following the news that its creative director, Frida Giannini, and chief executive officer Patrizio di Marco will exit the luxury goods house. The failure of the current team’s efforts to turn around the flagging brand precipitated their departure, sources said, and set off a guessing game as to who will succeed Giannini and who might be able to get the brand back on a solid growth track.

Marco Bizzarri will take over the ceo reins on Jan. 1 and may have a say in who might assume the creative director’s role. Possible candidates identified by sources include Givenchy’s Riccardo Tisci, Bottega Veneta’s Tomas Maier, Pucci’s Peter Dundas and Joseph Altuzarra.

Kering declined to indicate when it might unveil a succession plan. It is understood the company already has a short list of designers under consideration, and is likely to unveil the victor only after Giannini’s swan song, her fall 2015 women’s collection in Milan on Feb. 25. Giannini will present her last men’s show for Gucci in January.

But just as the fashion house faced a conundrum when its tag-team of Tom Ford and Domenico De Sole exited, Gucci now faces an existential question as to what type of brand it wants to be: One focused on chic-but-classic styles à la Hermès, or a label that generates fashion buzz in the form of rivals Louis Vuitton or Prada.

Tisci, whom sources continue to say heads the list of potential candidates, would certainly create excitement, as he has at Givenchy.

Asked about him, a Kering spokeswoman said, “We never comment on rumors. All I can say is the recruitment is under way.”

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Givenchy parent LVMH Moët Hennessy Louis Vuitton declined to comment on the Tisci speculation.

According to sources, Tisci has been approached by Gucci, but the likelihood of a deal could not immediately be learned.

WWD reported in February 2013, citing market sources, that Tisci renewed his Givenchy contract for another three years, which could impede his immediate mobility. It is understood the current pact expires in October 2015 — a gap that might be too long for Gucci to wait.

As for whether he might be able to exit Givenchy early, that seems unlikely. LVMH has a reputation for strictly enforcing its employment contracts and non-compete clauses. For example, Mulberry recently poached Céline’s Johnny Coca as its new creative director, but the accessories guru is only able to start work at the British firm in July after his contract with LVMH runs out.

What’s more, LVMH would presumably look dimly on one of its star talents defecting to a rival luxury brand, and fight to keep him. LVMH chairman Bernard Arnault recently put one of his most seasoned and high-potential executives, Philippe Fortunato, at the management helm of Givenchy to capitalize on the brand’s momentum. Most recently, Fortunato was with Louis Vuitton as president and ceo of the North Asia region and he’s also held senior posts at Fendi and Christian Dior.

Tisci is to mark 10 years at Givenchy in 2015 and recently voiced his enthusiasm about a slew of projects, including key boutique openings in the U.S. and a possible return to couture presentations. Fueled by his couture-meets-street confections, Givenchy is on track to reach revenues of 350 million euros, or $433.3 million at current exchange, this year, sources estimate. Givenchy declined all comment.

Internal candidates for Gucci could include rising fashion stars Joseph Altuzarra and Christopher Kane. Kering took a minority stake in Altuzarra’s New York-based fashion house last year and the designer has sat front-row at the Gucci show. The son of a French-Basque father and an American mother, Altuzarra grew up in Paris and has occasionally referenced Tom Ford-era Gucci in his signature collections.

The group also has a stake in Kane’s label, which is one of the buzziest among the new crop of London designers.

Others pointed to Bottega’s creative director Maier, prized for his high taste level, extensive experience with leather goods, wide creative register and a disciplined approach to the design process and today’s merry-go-round of constant collections. Stefano Pilati, an alum of Gucci and Kering-owned Yves Saint Laurent, is also said to be in the frame. The Italian designer, who parted ways with YSL after his contract expired, currently is heading design at Ermenegildo Zegna and its cashmere house Agnona, had a strong track record of creating coveted accessories during his eight-year tenure at YSL, sketching out hit styles like the Muse and Downtown bags and the Tribute shoe, a sexy platform sandal.

One question would be whether Kering would want to rob another of the group’s larger brands of its creative force and move him to Gucci.

Dundas, a veteran of Roberto Cavalli and the designer at Emilio Pucci, is also seen as a possibility for the high-profile design post. Maria Grazia Chiuri, with her accessories experience at Fendi and Valentino, where she also developed the brand’s ready-to-wear with Pierpaolo Piccioli, was seen as a contender by one source — although, again, she presumably has a contract at Valentino that might eliminate any chance of her moving.

Whoever takes the design helm, Kering emphasized that di Marco’s strategy of elevating the brand would remain under Bizzarri — who, ironically, succeeded di Marco as ceo of Bottega in 2009 once di Marco moved to Gucci.

“There is no change in terms of strategic approach for Gucci. We will continue to pursue the implementation of the brand elevation strategy,” François-Henri Pinault, chairman and ceo of Kering, told WWD.

During his brief tenure as head of Kering’s luxury couture and leather-goods division, Bizzarri installed new ceo’s at Brioni, Christopher Kane and Tomas Maier’s namesake New York fashion house.

“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,” said Pinault, who will hold Bizzarri’s role at Kering ad interim. Kering said it intends to name a successor to Bizzarri, noting that putting a senior executive at the helm of its soft luxury activities, excepting its largest brand Gucci, has proven “very relevant.”

It is understood a recruitment is under way and that internal and external candidates are being considered. Frederick Lukoff, president and ceo of Stella McCartney since 2009, is seen as a leading contender within the group — a low-key, but accomplished executive in the mold of Bizzarri.

Apart from succession plans, the other question circulating is what sparked Giannini’s and di Marco’s exit, which appears less-than-voluntary. There have been ongoing rumors for more than a year that the duo, who also are life partners, were on their way out, but they and Kering executives consistently denied them. The suddenness of the news on Friday took many by surprise, even within the company, also in light of the fact that Giannini in May told WWD that she had just renewed her contract.

Sources had recently speculated Giannini would not leave before the presentation of a home collection at Milan’s international furniture and design show, the Salone del Mobile, in April.

But it appears Kering lost patience. While the problems at Gucci mirror some of the issues rival luxury brands are facing, it is perhaps more critical for Kering to sort them out since the brand is its largest single business. Kering also faces ongoing problems at other units in its portfolio, such as Puma.

“Di Marco and Giannini were first asked to upgrade the positioning of the handbags in a market saturated by their logoed canvas in the 2010-12 period and the strategy worked,” said one luxury goods analyst. “My impression is that, over the past two years, called upon to further raise the luxury content, the upgrade was accompanied by ready-to-wear collections that were not relevant enough, which in turn affected the performance of the bags.”

The analyst contended that Giannini’s strength lies in the design of accessories and that di Marco’s support of his partner, with whom he shares a daughter, may have ultimately cost him his job. “If he had forced Giannini to focus on accessories and hired a strong apparel designer to help her on the ready-to-wear….” speculated the source, perhaps he would have been able to stay on. “Gucci is about seduction and sex appeal, and Gucci was the first brand to embrace this under Tom Ford. It’s a paradox that the brand has lost this edge. Whoever succeeds Giannini should recapture it.”

One retailer, who requested anonymity, concurred, saying that handbags have “always performed well” in-store and that “the weak ring in the chain was a softness in ready-to-wear.”

Bizzarri, who piloted Bottega Veneta, Kering’s most upscale leather-goods brand before his April promotion, should offer a steady hand at Gucci. Armando Branchini, deputy chairman of Milan-based consultancy InterCorporate, said Bizzarri was “the right man to take the wheel” at the fashion house, noting the solid work also done by di Marco, who, “let’s not forget, joined the house in annus horribilis 2009.”

In the latest third quarter, Gucci’s sales slipped 1.6 percent to 851 million euros, or $1.13 billion, 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 shake-up 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 Taiwan, Hong Kong and Vancouver.

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 rtw 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, 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 of the most prominent luxury megabrands. 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.”

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 her 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.”

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 reiterated their denials that they planned to go anywhere soon — at least of their own volition. “Honestly, I don’t know what else to say in that it’s a rumor that started a while ago. Honestly, what is the reason why? Because we have seen a slowdown in sales?” di Marco told WWD then. “On the basis of just [financial results] there are companies that should be changing [management] every three minutes.”

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