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Kering’s Creative Shake-up Puts Its Turnaround to the Test

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Kering’s Creative Shake-up Puts Its Turnaround to the Test

After its star brand Gucci missed forecasts in the third quarter, the French luxury group’s latest designer shuffles came under the microscope.

PARIS — One year into its turnaround under chief executive officer Luca de Meo, Kering is banking on creative director renewal to rev up demand amid a challenging global economic environment.

But with vacant designer spots to be filled at Saint Laurent and Alexander McQueen, rumors of another potential change at Balenciaga and questions about customer response to the new Gucci, investors are worried that creative churn will prove more of a challenge than an opportunity.

Kering’s growth engine stalled in the third quarter, as Gucci struggled to gain speed amid a sector-wide slump in demand in China.

The French luxury group said revenues for the three months ended Sept. 30 remained flat at reported exchange rates, totaling 3.35 billion euros. This represented a decrease of 1 percent in comparable terms, above a consensus forecast for a 1.3 percent organic sales drop.

But Gucci, the group’s star brand and main profit engine, missed expectations, posting a 6 percent drop in sales at constant exchange rates, worse than the 5.4 percent decrease expected by analysts.

This followed a comparatively smaller 2 percent decline in the second quarter, when the group showed progress by posting its first comparable sales increase in three years.

In a conference call on Thursday after the market close, chief financial officer Armelle Poulou was peppered with questions about designer changes, with analysts expressing fears this would delay the group’s nascent recovery.


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