Kering shares plunge 11% after Demna Gvasalia named as Gucci’s artistic director
A Gucci store, operated by Kering SA, in the Sanlitun area of Beijing, China, on Saturday, Oct. 12, 2024.
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Shares of Kering experienced a sharp decline on Friday following the announcement that Demna Gvasalia would be taking over as the new artistic director of Gucci, a struggling fashion line under the Kering umbrella.
Gvasalia, also known as Demna, comes from within the Kering family, having previously worked at Balenciaga. He will be replacing Sabato De Sarno, who recently departed from the company.
The stock closed down 10.7%, after initially dropping as much as 12.4% — marking its largest decrease since October 2008, as reported by Reuters.
“Demna’s influence on the industry, Balenciaga, and the overall success of the Group has been immense. His creative vision is precisely what Gucci needs,” stated François-Henri Pinault, chairman and CEO of Kering.
Demna, a Georgian national, is the first non-Italian artistic director at Gucci since Tom Ford. With nearly a decade of experience at Balenciaga, he is renowned for blending streetwear with luxury fashion.
In 2022, he stirred controversy with an ad campaign featuring children and bondage-style accessories. This move drew criticism, with one ad showing a child holding a teddy bear-shaped handbag in bondage-style straps.
Kering’s appointment of Demna is part of its ongoing efforts to revitalize the struggling Gucci brand, which contributes significantly to the Group’s revenues but has faced challenges in the Chinese market.
Gucci’s sales plummeted by 24% in the fourth quarter of last year to 1.92 billion euros, reflecting a broader 12% decline in overall group revenues.
Demna is set to assume his new role in July 2025, with speculations suggesting that an external appointment was necessary to rejuvenate Gucci’s appeal amidst changing industry trends towards “quiet luxury.”
Analysts from Jefferies emphasized the need for swift action to restore Gucci’s fashion identity. They also questioned whether Demna’s impact would be evident at Gucci’s upcoming Milan fashion show or if we would have to wait until 2026 to see the full extent of his influence.
