Renault Savior Luca de Meo Takes Helm at Kering to Revitalize Luxury Giant

Kering, the French luxury conglomerate, is poised for a significant leadership shift as its Annual General Meeting (AGM) on Tuesday is set to approve the appointment of Luca de Meo as its new chief executive officer. De Meo, an Italian executive credited with the turnaround of carmaker Renault, steps into a formidable role with the primary mission of revitalizing the luxury group, beginning with its flagship brand, Gucci. The vote is anticipated to be a formality, given the Pinault family's substantial control, holding 42.3% of Kering's capital and commanding 59.3% of the voting rights through their holding company, Artémis.

At the AGM, shareholders will also deliberate on several other key proposals. Current CEO François-Henri Pinault, aged 63, is slated to remain as the group's chairman, overseeing a portfolio that includes esteemed brands like Yves Saint Laurent, Balenciaga, and Bottega Veneta, in addition to Gucci. To facilitate future leadership continuity, shareholders will be asked to approve extensions to the age limits for both the chairman, from 65 to 80, and the CEO, from 65 to 70. Furthermore, a "start-up allowance" of €20 million has been proposed for Luca de Meo, 58, as he transitions from his previous role at Renault to take up his new post at Kering on September 15.

De Meo's task is undoubtedly challenging, as Kering faces a period of significant financial headwinds. The group recently announced a stark 46% fall in first-half net profit, dropping to €474 million, alongside a 16% plunge in sales to €7.6 billion. His success at Renault in a previous turnaround effort will be keenly watched as he endeavors to replicate that performance within the luxury sector. The immediate pressure will be on addressing the group's declining profitability and sales figures.

The imperative to revive Gucci, which accounts for a substantial 44% of the group's sales and nearly two-thirds of its operating profitability, is central to De Meo's mandate. The "Gucci behemoth" saw its first-half sales tumble by 27% to €1.46 billion. This decline is part of a broader trend, with the Italian brand's annual sales plunging from €10.5 billion to €7.65 billion between 2022 and 2024. Amidst these struggles, Gucci has also seen changes in its creative leadership, with Demna, formerly of Balenciaga, replacing Sabato de Sarno as creative director in March, following Alessandro Michele's departure at the end of 2022.

Kering's challenges extend beyond Gucci, with most of its luxury brands grappling with an unfavorable economic climate affecting the broader luxury goods market. Yves Saint Laurent experienced an 11% fall in first-half sales, while the "other houses" segment, which includes Balenciaga, saw a 15% decline. Only Bottega Veneta and Kering Eyewear, the group's eyewear and beauty division, reported marginal sales increases of 1% and 2% respectively, highlighting the widespread nature of the group's current difficulties.

Compounding Kering's operational struggles is a significant rise in its financial debt, which has swelled from near zero in 2021 to €9.5 billion in the first half of 2025. This increase is attributed to several strategic acquisitions aimed at diversifying the group's portfolio and reducing its dependence on Gucci. Notable investments include the €3.5 billion acquisition of the Creed perfume brand, and the purchase of a 30% stake in Valentino for €1.7 billion, with an option to acquire the remaining 70% from the Qatari investment fund Mayhoola between May 2026 and 2028. Kering has also invested €1.3 billion in prestigious real estate, such as the Via Monte Napoleone property in Milan.

In a move to manage its financial leverage, Kering initiated a real estate divestment strategy. In early 2025, the group signed an agreement with investment company Ardian for the sale of €837 million worth of real estate assets in Paris, including the Hôtel de Nocé Place Vendôme, though Kering will retain a 40% stake in this portfolio. This strategy is expected to continue with other high-value properties like the Fifth Avenue building in New York and the boutique on Via Monte Napoleone. Bernstein Bank commented on this approach, stating, "Reselling real estate (at prices lower than the purchase price) is a bitter but necessary remedy." They also mused, "We wonder whether it will be possible to agree with Mayhoola to pay more of the balance of the Valentino acquisition with Kering shares, rather than cash."

Amidst these changes and challenges, industry analysts maintain a cautious outlook. HSBC bank analysts, for instance, expressed skepticism about relying on a single individual for a turnaround. "Do we believe in the savior concept? Absolutely not," they warned in a note, emphasizing that "In luxury, success or failure comes from the team responsible for articulating a coherent vision, not just the person who embodies it." This perspective underscores the collective effort required to navigate Kering through its current difficulties and restore its growth trajectory under Luca de Meo's leadership.