Shares of Kering SA nosedived nearly 13% on Friday after the luxury fashion house announced Demna Gvasalia as the new artistic director of Gucci.
The move marks a bold shift for the struggling brand, which has faced slumping sales and declining demand in key markets like China.
Demna, widely recognized for his disruptive aesthetic at Balenciaga, is expected to revamp Gucci’s creative vision, but investors remain skeptical about the transition.
JUST IN – Demna Gvasalia of Balenciaga is now the creative director of Gucci!
The stock drop signals market concerns over whether Demna can successfully steer Gucci out of its sales slump.
Gucci’s revenue plunged 24% year-on-year in the fourth quarter, falling to €1.92 billion, dragging down Kering’s total revenue by 12%.
The appointment comes just a month after Sabato De Sarno’s departure, underscoring Kering’s urgency to reposition Gucci in the highly competitive luxury fashion market.
Who is Demna Gvasalia?
Demna, who dropped his last name professionally in 2021, has built a reputation as one of the most innovative and provocative designers in the fashion world.
Since taking over Balenciaga in 2015, he transformed the brand into a streetwear powerhouse, merging avant-garde designs with cultural commentary.
Under his leadership, Balenciaga’s revenue skyrocketed from approximately €200 million to an estimated €1.76 billion in 2021.
His appointment at Gucci signals a major creative shift. “His creative power is exactly what Gucci needs,” said François-Henri Pinault, Kering’s chairman and CEO, in a statement. Demna himself expressed enthusiasm about the role, stating:
“It is an honour to contribute to a house that I deeply respect and have long admired. I look forward to writing a new chapter of Gucci’s amazing story.”
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Gucci’s declining sales and Kering’s turnaround strategy
Gucci, once Kering’s crown jewel, has struggled in recent years amid shifting consumer preferences, weaker demand in China, and increasing competition from brands like Prada, Louis Vuitton, and Hermès.
Despite being Italy’s largest luxury brand, Gucci’s revenue fell from a peak of €10.5 billion in 2022 to €7.65 billion in 2024.
Kering’s strategy under CEO Stefano Cantino has focused on brand elevation, quality control, and operational efficiency.
Cantino and Francesca Bellettini, Kering’s deputy CEO for brand development, first approached Demna several months ago.
“We went out for dinner and I said, ‘We would really love to talk about this opportunity,’” Bellettini revealed.
“After a second of thinking, he was very excited and said: ‘Yes! I have it in my mind — let me put together the project for you.’”
Demna’s vision for Gucci
Demna’s design philosophy has always blended street culture, irony, and high fashion, making him a polarizing yet highly influential figure.
His challenge at Gucci will be to balance its luxury heritage with his signature edgy aesthetic.
Interestingly, this isn’t his first creative engagement with Gucci.
In 2021, he collaborated with then-creative director Alessandro Michele on the “Hacker Project,” which saw Balenciaga graphics appear on iconic Gucci handbags.
Now, he will have full creative control, and industry insiders are eager to see how he integrates Gucci’s traditional Italian craftsmanship with his progressive vision.
Market fears and investor skepticism
Despite Kering’s confidence in Demna, investors are concerned about the risks.
Gucci’s brand identity has been through several transformations in recent years, and a radical shift in design philosophy could either revitalize sales or alienate its core customer base.
Luxury stocks have faced growing headwinds due to economic uncertainties, China’s slowing luxury spending, and changing consumer tastes.
Demna’s history at Balenciaga has also been controversial, particularly in 2022, when the brand faced backlash over a poorly received ad campaign.
Demna will officially begin his tenure at Gucci after his final Balenciaga couture show on July 9.
He has already started working with Cantino, including a visit to Gucci’s archives in Florence to study the brand’s history.
Executives at Kering believe Gucci is primed for a major comeback.
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