Can Luca de Meo turn around Kering?

When Luca de Meo arrived at Kering a year ago with a mandate to shake up the ailing French luxury group, his arrival caused quite a stir in the fashion world. Handsome and soigné, he certainly looked the part. It was the provenance of the Italian now charged with restoring the fortunes of couture legends Gucci, Saint Laurent, Balenciaga and Alexander McQueen that raised eyebrows. Having spent most of his career in the car industry, de Meo arrived directly from Renault. Fashionistas swiftly dubbed him “the car guy”.

Luca de Meo set about introducing a strategic blueprint for the group – which is controlled by the billionaire Pinault family through their holding company Artemis – which appeared lifted from the car industry. His plan was “to fuse the operations of Kering’s independently managed brands into a more integrated industrial machine by standardising production and centralising decision-making”, says the Financial Times – anathema in the gilded luxury business where there is “a commitment to artisanal craftsmanship as a way of justifying the hefty price tags of its products”.

Luca de Meo started as he meant to go on in his “trademark direct way”. When asked which executive car he wished to be chauffeured around in, he “opted for an electric van” because it would give him and his team more space to work on the road. In February, he declared that “the level of bullshit has diminished enormously” within the company. “We say things as they are and we attack them one after the other.”

Luca de Meo’s ‘reconKering’ experiment

If de Meo’s iconoclastic streak ruffled feathers at the atelier, his self-styled “ReconKering” experiment was seized upon with relief by investors who had seen Kering’s market value shoot from around €20 billion in 2013 to almost €100 billion at its 2021 peak – before plunging back to a low of €20 billion last year. True, the rout was an industry-wide phenomenon primarily down to retrenchment in luxury’s key Chinese market. But, at Kering, the decline was exacerbated by the fall from grace of its main revenue engine, Gucci, which was being “ghosted by shoppers”, says Bloomberg. De Meo “made an incredibly strong start”. Within weeks, he’d strengthened Kering’s balance sheet, streamlining assets and cutting borrowing. There were signs of improvement at Gucci, too. But last week, he reported that Gucci sales had gone backwards again. Shares plunged 17% – their steepest one-day decline in a decade. “Almost all the gain since De Meo’s arrival has now been erased.”

“As an Italian native, it’s very easy for me to understand that Gucci is more than a brand. It’s one of the most admired expressions of the culture of this country,” de Meo observed last year. Born in Milan in 1967, de Meo spent most of his childhood living abroad, says The Wall Street Journal. While living in Ivory Coast, the young Luca had an epiphany. He recalled “watching an Alfa Romeo tear through the Rallye Côte d’Ivoire”, igniting “a lifelong fascination with cars”. After graduating from Milan’s Bocconi University in 1991 with a degree in business administration, he began a career that would take in most of Europe’s leading carmakers – including Renault, where he cut his teeth, Fiat and Volkswagen. De Meo built his reputation “first as a marketer – credited with revitalising brands – and later as a turnaround specialist”.

‘Luca de Meo’s honeymoon at Kering is over’

“The studio is the soul of a luxury house,” says de Meo. “There’s an element of magic.” Can he reconjure it at Kering? It looks like a long battle ahead, says Bloomberg. Gucci – under creative director Demna Gvasalia – “is not yet firing on all cylinders” and the rest of Kering’s fashion brands are all grappling with transitions. “Alexander McQueen and Balenciaga each look set to recruit their second couturier in three years.” It can take about 18 months for a designer to reach their full potential, pushing the results of de Meo’s strategic blueprint further into the future.

De Meo may take these challenges in his stride. After all, he is used to dealing with the brutal competition and thin margins of the car industry. One thing is certain, however. “Luca de Meo’s honeymoon at Kering is over.”

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