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14 March 2025

Gucci Appoints Demna Amidst Stock Plunge And Mixed Reactions

Kering faces investor skepticism as luxury house undergoes major leadership change

Kering, the luxury fashion empire led by François-Henri Pinault, experienced a significant downturn on March 14, 2025, following the announcement of Demna Gvasalia as the new artistic director of Gucci. The company's shares plummeted as much as 13.5% on the Paris Stock Exchange, marking its lowest point in three months, as investors reacted to the unexpected decision.

Demna's appointment, announced on March 13, 2025, has sent ripples through the fashion world, catching analysts and industry insiders by surprise. His predecessor, Sabato De Sarno, had only held the position for two years before being let go due to Gucci's disappointing performance. The luxury label recorded a staggering 23% drop in sales for 2024, totaling €7.65 billion ($8.34 billion), leading Kering to report its own 12% decline to €17.2 billion ($18.6 billion).

François-Henri Pinault, Kering’s chairman and CEO, confidently stated, "His creative power is exactly what Gucci needs," praising Demna's innovative direction from his time at Balenciaga where he earned acclaim for his avant-garde approach to fashion. At Balenciaga, Demna was not only celebrated for pushing boundaries but also faced backlash, particularly for controversial campaigns, most infamously one involving child imagery which led to widespread criticism and legal issues. Despite this, his unique vision and ability to engage younger audiences made him a compelling, albeit risky, choice for Gucci.

This appointment is particularly pivotal as Gucci remains Kering’s top brand, generating nearly half of its sales and two-thirds of its profits. The company's downward trend has sparked not only investor concern but has also ignited discussions on social media, especially across platforms popular with Chinese consumers who had mixed reactions. Alexis Bonhomme, CEO of luxury consultancy Trinity Asia, observed, "Demna’s hype-driven, streetwear-centric playbook made Balenciaga a sensation," but raised questions about how well such methods would translate to Gucci's more traditional heritage.

The fashion industry is abuzz with speculation about what Demna's leadership will bring. Observers anticipate a radical transformation, with expectations set for him to reinvent the Gucci identity, which has historically oscillated between maximalism and minimalism. With Demna at the helm, there's potential for his bold ideas—think distorted logos and chaotic runway shows—to redefine what luxury means today.

At the same time, concerns linger about whether Kering's decision to appoint someone from within rather than securing one of the industry's big-name talents reflects insecurity. Analysts hinted at this contributing to Kering's stock drop, with Ariane Hayate of Edmond de Rothschild saying it "might appear to have been taken in lack of options, but is also a bold move". Retail analysts express cautious optimism but acknowledge the challenge of balancing innovation with Gucci's rich legacy.

Demna, who has famously stated, "I can't disconnect from reality," faces external pressure not only from shareholders but from the public as Gucci has struggled to connect with its core demographic, particularly millennials and Gen Z consumers craving authenticity and edgy designs. While Gucci's heritage is steeped in luxury and elegance, Demna’s Directorate promises to inject vitality aimed at re-energizing the brand.

Heading forward, industry insiders are eagerly awaiting Demna's first collection for Gucci, expected to drop by the end of 2025. The anticipation is unmistakable, as the fashion community watches closely for how he integrates his avant-garde aesthetic with Gucci’s signature styles, which include iconic pieces like the horsebit loafer and the GG logo. The fashion world has already seen glimpses of what Demna can do, but can he translate this experimental edge to one of the most recognizable brands globally?

While Gucci’s identity struggles with relevance, Demna appears poised to make this challenge his playground, ready to break the status quo and perhaps even shake the industry itself. If he succeeds, the new Gucci might just resonate with younger consumers who are more engaged with memes and digital culture than ever before. Alternatively, any misstep could draw Kering and Gucci even closer to instability amid increasing scrutiny and competitive pressures.

The ultimate question now is whether Demna has the freedom to disrupt the iconic brand as he has elsewhere. Will Gucci be able to navigate the tumult of change and emerge victorious? Only time will tell. The spotlight is on Demna to debut his direction when Gucci unveils its upcoming collections, setting the stage for what could be either the rebirth of Gucci or another chapter of struggle for the storied fashion house.