Gucci Group N.V. (ADR) (OTCMKTS:GUCG) announced on Friday, December 12th that the luxury brand’s CEO and creative director were both stepping down in the next few months. The company’s statement noted Gucci Chief Executive Officer Patrizio di Marco will be succeeded by Marco Bizzarri on January 1st, and Creative Director Frida Giannini will depart after showing the fall-winter collection in February. Bizzarri is currently the head of Gucci owner Kering SA’s luxury division.
This is the biggest executive shakeup at Gucci since the 2004 departure of Domenico de Sole and Tom Ford, who were generally credited with reviving the iconic brand from a fading family enterprise to a global fashion house. However, Gucci has struggled recently as customers switch to labels they see as more exclusive, with sales dropping in the third quarter.
Statement from analyst
“Clearly, they haven’t been able to excite consumers enough,” commented Luca Solca, a luxury analyst at Exane BNP Paribas, pointing to Gucci’s sales declines in the last few quarters. “But it’s good news for the company. The firm needs a new start to remain competitive.”
Di Marco has not been able to get the job done for Gucci
Of note, di Marco has been Gucci’s CEO since 2009, and was working to revamp the Italian house after years of neglect. When he took the helm of Gucci, he decided to wean the brand from excessive dependence on its double-G logo, which risked losing its exclusive appeal through overuse.
“If you use the logo as if it were the only thing you’ve got, it’s wrong,” di Marco explained in a recent interview. His strategy also involved increasing Gucci’s average handbag prices to try and attract high-end customers.
Analysts say his strategy just wasn’t enough. The slowdown in growth in China and consumers’ preference for smaller boutique brands have also led to less sales. Gucci, which represents nearly 30% of Kering’s revenue, reported a 1.6% year-over-year decrease in revenue for the third quarter. That came on the heels of a 4.5% revenue decline in the first half, a trend reversal relative to the luxury brand’s strong growth rates of the last several years.
Gucci is dealing with the same challenges other major luxury brands face, such as the slowdown in China, Western sanctions against Russia and the stuttering European economy.
This shakeup at Gucci comes following months of speculation over the future of creative director Giannini, who has been chief designer for nearly a decade, but has faced criticism saying her approach lacked freshness.