Kering shares slump after French luxury giant hires controversial new artistic director for Gucci

Shares of luxury giant Kering fell as much as 13% on Friday after the company named a new creative director to revive its struggling Gucci brand. Kering, which also owns Saint Laurent, Balenciaga, and Bottega Veneta, tapped Balenciaga designer Demna Gvasalia for the role, breaking with its yearslong tradition of promoting in-house talent and favoring Italian leadership.

Gucci has been in a major sales slump as the 104-year-old luxury brand struggles to keep up with trendier rivals like Prada and MiuMiu. In Q4, Gucci’s revenue tumbled 24%, a blow that cuts deep for Kering since the brand accounts for nearly half of the group’s sales and two-thirds of its operating profit.

Incoming designer Gvasalia has spent nearly a decade at Balenciaga, where his edgy, deconstructed designs and high-profile collaborations with celebrities like Kim Kardashian helped drive the brand’s success. But his tenure has also been marked by controversy — most notably Balenciaga’s 2023 scandal over a botched children’s marketing campaign, which triggered public backlash and a swift decline in sales.

Despite Wall Street’s cold reception to the new hire, Kering Chairman and CEO François-Henri Pinault is standing by his bet. “Demna’s contribution to the industry, to Balenciaga, and to the Group’s success has been tremendous,” the chief exec said in a statement. “His creative power is exactly what Gucci needs.”