Gucci faces daunting task to replace top designer

The abrupt departure from Gucci of Alessandro Michele, the flamboyant designer who was a favourite of Harry Styles and Lady Gaga, increases pressure on owner Kering as it faces slowing revenue growth at the Italian fashion house.

News of the creative director’s exit after seven years comes as Kering is seeking to reinvigorate the label, which accounted for two-thirds of the parent company’s profits last year, and ahead of the lucrative holiday shopping season.

Tensions had been high between the designer and company management, sources told Reuters.

Announcing his departure on Wednesday, Michele referred to “different perspectives each one of us may have.”

Kering chairperson and CEO Fran Ãsois-Henri Pinault lauded the designer’s tenure as “an outstanding moment” in Gucci’s history. He did not name a successor.

Without an obvious replacement, analysts said Michele’s exit created a vacuum the label needs to fill fast.

“This raises a few question marks in our view on the execution and evolution of the brand in the coming months, leaving further uncertainty around the timing of the acceleration of the brand’s momentum,” JP Morgan analyst Chiara Battistini said in a research note on Thursday.

Michele’s departure is “more than just the exit of one of the most iconic designers of the last decade,” said analysts at Jefferies, who pointed to a likely “deeper rethink” of the label at Kering.

“The next step is necessarily more complicated now,” they added.

Shares in Kering, worth more than 66 billion euros, have lagged rivals in recent years. They have lost a quarter of their value this year.

FURRY LOAFERS
Michele, 49, reinvigorated the brand with his eccentric, gender-fluid styles popular with younger shoppers.

Early hits were fur-lined loafers, embellished with the label’s signature horse-bit, that fetched over $1 000 and the Dionysus handbag, with a chain strap and double tiger heads, starting at around $900 for mini sizes.

After his promotion from designing accessories in 2015, he helped fuel profits, which grew four-fold by 2019 as revenue soared to nearly 10 billion euros from under 4 billion.

In recent years, growth slowed while rivals like Dior and Louis Vuitton, owned by rival luxury group LVMH, have shot ahead.

Third-quarter sales at LVMH’s fashion and leather goods division rose 22% while Gucci grew by 9%, less than the market had expected, and which some analysts attributed to fading appetite for the designer’s styles.

They have questioned the mid-term target for annual sales of 15 billion euros, set in June.

The brand has also suffered from COVID-19 lockdowns in China where it has an extensive store network and higher exposure compared with other heavyweights.