Turnaround Specialist Luca de Meo Joins Kering — Can the Luxury Giant Stage a Comeback?

TradingKey – Boosted by the announcement of a new CEO, shares of Kering, the French luxury giant and parent company of Gucci, surged 11.76% on June 17, marking its biggest single-day gain since November 2008.

[Kering Intraday Chart, Source: investing.com]

The company announced it has poached Luca de Meo, the current CEO of Renault, to lead the group as its new Chief Executive. De Meo is set to officially take over on September 15, becoming the first external executive to helm the company in its history.

At 57 years old, de Meo brings with him more than three decades of experience in the automotive industry. He is widely credited with turning around Renault’s fortunes in just 18 months and reshaping its strategic alliance with Nissan.

Despite lacking direct experience in the luxury sector, investors have placed high hopes on his proven track record in managing complex corporate challenges. Analysts expect him to move quickly to cut costs, including potential store closures, layoffs, and asset sales, in an effort to tackle Kering’s debt burden exceeding €10 billion.

Meanwhile, Renault’s shares fell more than 8% on the same day, marking its largest single-day drop in over two years.

Current Kering CEO François-Henri Pinault, son of the founder, will step down from day-to-day operations to become Chairman of the Board. Under his leadership, Kering lost nearly three-quarters of its market value over the past four years, as Gucci struggled with stagnant growth and aggressive acquisitions weighed on financial performance, prompting the need for strategic change.

While some remain skeptical about de Meo’s ability to navigate the creative side of the luxury business, there are precedents for successful outsiders in the sector. For example, Chanel’s CEO Leena Nair and former Gucci head Robert Polet both came from the consumer goods industry — and delivered strong results.