A big change is afoot at Gucci, and investors don’t know what to think.
On Wednesday, the Italian fashion house confirmed speculation that its creative director Alessandro Michele would leave the brand, which he had helmed since 2015. A day earlier, a Women’s Wear Daily report revealed tensions between Michele and the senior management at Kering, Gucci’s parent company. An anonymous source told WWD that Michele “was asked to initiate a strong design shift” but did not meet the request. Another source said Kering’s chairman and CEO François-Henri Pinault is looking at a change of pace for the group’s biggest label.
The news had an almost instantaneous impact on Kering’s stock prices. The corporation’s shares opened up two percent on Wednesday before dropping 0.4 percent in mid-afternoon trading—then rising again in the early evening, as reported by Reuters.
“There are times when paths part ways because of the different perspectives each one of us may have,” Michele said in a statement shared with Robb Report. “Today an extraordinary journey ends for me, lasting more than 20 years, within a company to which I have tirelessly dedicated all my love and creative passion. During this long period, Gucci has been my home, my adopted family. To this extended family, to all the individuals who have looked after and supported it, I send my most sincere thanks, my biggest and most heartfelt embrace. Together with them, I have wished, dreamed, imagined. Without them, none of what I have built would have been possible. To them goes my most sincerest wish: may you continue to cultivate your dreams, the subtle and intangible matter that makes life worth living. May you continue to nourish yourselves with poetic and inclusive imagery, remaining faithful to your values. May you always live by your passions, propelled by the wind of freedom.”
Michele, a former accessories designer, started at Gucci in 2002 but was officially appointed to the top creative role in January 2015. Over the past seven years, he transformed the classic Italian label with his maximalist designs and avant-garde androgynous aesthetic. Alongside CEO Marco Bizzarri, Michele oversaw a period of unprecedented growth at Gucci. In 2021, it was named Kering’s most profitable brand, with revenue rising 31 percent year over year to $10 billion (€9.73 billion).
In recent quarters, however, Gucci’s popularity has started to wane. The label’s performance in the Chinese market, in particular, had become a source of concern for investors. “It’s a brand that was losing momentum, if they don’t put someone in charge quick it will lose even more momentum,” one source said.
Moreover, Kering shares are down by around 24 percent since the start of the year. For comparison’s sake, shares of its arch-rival LVMH have dropped just four percent.
“After seven years in charge of Gucci’s creative engine, it may well be time for a change, and consensus amongst institutional investors appears to be forming that a new approach is required to reignite the brand,” RBC analysts told Reuters.
Kering and Gucci did not immediately respond to Robb Report’s request for comment.