Gucci : end of the road for Alessandro Michele ?

The honeymoon between Gucci and its creative director Alessandro Michele is apparently over. According to sources cited by the American trade daily WWD, the designer is exiting the Italian luxury house, the powerhouse of the Kering group. The information was neither confirmed nor denied by the label and the luxury group, Kering preferring to stick to a "no comment" answer. Its shares were down on the Paris stock exchange Wednesday morning though. But with the Kering group strongly dependant on its star brand, the question has arisen. Should it continue working with the designer or not?

Kering sales reached €9.73 billion in 2021, an increase of 31%, with Gucci alone accounting for more than half of the group's revenues and three-quarters of its operating profit. In the third quarter, it recorded organic growth of 9% compared to +4% in the second quarter (+18% on a reported basis) and 8% for the first nine months of the year to €7.75 billion. When the quarterly results were published in October, management repeated that the recovery was under way, but that it was a medium-to-long-term process. That's a time frame that now seems probably too long.

With the arrival at the helm in 2015 of Michele and CEO Marco Bizzarri, the house experienced a series of spectacular leaps up until 2019, before being stopped in its tracks by Covid with China being one of Gucci's largest markets. Its slowdown has accelerated since the beginning of this year, while other luxury houses were recording record growth.

With his eclectic and detailed style, mixing genres and influences, blending eccentricity and more classic pieces, the designer managed to give the historic house the boost it needed at the time. His immediate success was accompanied by a strategy of creating a unique and recognisable universe around his style, which was enriched over the seasons. But this aesthetic, offered from season to season, seems to have run out of steam in the last year and seems to be less desirable today.

Bernstein analyst Luca Solca has described this potential departure as "very good news", even if it may cause Kering's shares to fall. The analyst believes that "Gucci is suffering from brand fatigue, because Alessandro Michele has been repeating the same thing over and over again for the past seven years," and this has ended up boring those consumers who massively bought the label's products since the arrival of the designer, namely the Chinese. "This is not surprising. To re-accelerate, Gucci doesn't need to generalise, or become timeless. It needs to open a new creative chapter. Which -- in all likelihood -- can only be done with new creative energy and talent. The sooner the better," he said in a note.

Analysts at RBC seem to agree. "After seven years at the helm of Gucci's creative engine, it may well be time for a change, and there seems to be a consensus among institutional investors that a new approach is needed to revive the brand," they said, adding that "overall, the notion of a change in creative direction at Gucci is likely to be viewed positively."

In recent months, Gucci has welcomed some important new additions, with the appointment last spring of Laurent Cathala as head of fashion business in Greater China, and Maria Cristina Lomanto as executive vice-president, general manager of the brand. Benjamin Cercio has just been appointed head of global communications, while Robert Triefus has been promoted to managing director of Gucci Vault and Metaverse Ventures.

Above all, the position of studio director was created and entrusted this summer to one of Gucci's senior designers, whose name has not been disclosed. His mission was to supervise the design team and to support the artistic director. A position that could be crucial in the coming months to ensure a smooth transition to a new designer or even to take over the role. This is a bit like what happened at Bottega Veneta, another Kering brand, with Matthieu Blazy immediately succeeding Daniel Lee, when he exited just one year ago. It's also reminiscent of Gucci, when Michele, who had been with the house since 2002, became Frida Giannini's right-hand man from 2011, and then found himself catapulted to the style helm.

Gucci : end of the road for Alessandro Michele ?

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