Gucci names new deputy CEO as Kering seeks to stem sales decline

Paris: Gucci appointed a new deputy chief executive on Thursday as the Italian fashion house, part of the luxury group Kering, tries to turn around sliding sales.

Gucci said Stefano Cantino would join the company at the beginning of May with the job of aiding CEO Jean-François Palus "define and implement the brand strategy".

Longtime the growth motor for Kering, Gucci has stalled in recent months.

Sales slid six percent in 2023 and it recently warned they are likely to have fallen nearly 20 percent in the first quarter of this year.

Gucci, a brand famous for its leather handbags, accounts for half of Kering's revenue.

It has forced the group, which also includes Yves Saint Laurent, Balenciaga and Bottega Veneta, to take notice.

In February, chief executive Francois-Henri Pinault vowed to press on with a strategy to put Gucci "back on track" after Kering announced a 17-percent fall in net profits in 2023.

He warned, however, that this "won't happen overnight" and signalled he wants to bring in top-flight experts in sales, merchandising and sourcing.

Kering changed Gucci's top management last year, appointing deputy CEO and Pinault confidant Jean-Francois Palus to replace Marco Bizzarri, who had led the brand since 2015.

Sabato de Sarno succeeded Alessandro Michele as the brand's creative director in January 2023.

Cantino joins Gucci from Louis Vuitton, the flagship brand of Kering rival LVMH, the world's top luxury group.

"The appointment of Stefano Cantino as deputy CEO of Gucci is another step in the reinforcement of the iconic Florentine House," said Francesca Bellettini, Kering's deputy CEO for brand development.

"Together with them and the entire Gucci team, we will write a new and highly successful chapter in the history of our magnificent brand," she added.

Moving upmarket

While Kering needs to turn Gucci around, analysts point out that the group's dependence on a single fashion house is a strategic weakness.

"It's dangerous for a group to be dependent upon one house to that extent," fashion expert Eric Briones told AFP.

He noted that LVMH has two major growth motors in its fashion group -- Dior and Louis Vuitton -- and is trying to broaden that to five.

Kering also faces the challenge that Gucci is highly dependent upon Asia and a more "aspirational" clientele -- younger and less rich -- that follows trends more closely.

But the Asian luxury market has not regained its pre-Covid strength and inflation has crimped the spending power of the aspirational crowd.

Before the Covid pandemic hit, Gucci had launched a strategy to move upmarket with new segments targeting clients with higher purchasing power.

Fashion expert Julie El Ghouzzi said that in theory the strategy was sound, drawing a distinction between fashion, which is fleeting, and luxury, which has a longer-lasting appeal.

"Gucci initially had an economic model closer to fashion.

"That (model) needs to be updated more rapidly and, as a result, the popularity of brands is cyclical," she explained.

Moving upmarket "is the capacity to have iconic and timeless pieces which can be freshened up with fashion glitter", El Ghouzzi added.

She pointed to Gucci reinforcing products like its "Jackie" handbag, popularised by former US first lady Jacqueline Kennedy.