Turmoil at Gucci: What Sabato De Sarno’s Exit Means for Kering

This week, as Kering prepares to release its full-year financial results, the luxury industry watches closely, especially after the recent, surprising exit of Gucci’s creative director, Sabato De Sarno. This departure marks yet another turbulent chapter for Kering’s flagship brand, which has struggled to regain its former glory after years of declining performance.

A Testing Time for Kering

2024 has been a challenging year for Kering, with several profit warnings—a rarity in the usually buoyant luxury sector. The anticipation is stark, with analysts from Barclays projecting a 21% drop in Gucci’s full-year organic growth and a significant 47% decrease in group operating income to €2.5 billion. Kering’s stock price has mirrored this tumult, plummeting 38% over the past year.

The De Sarno Tenure: High Hopes, Hard Realities

Sabato De Sarno’s departure from Gucci marks a significant shift in the fashion industry, especially under the current climate of economic and political instability. His tenure was short but closely watched, as expectations were high for him to redefine Gucci with a “quiet luxury” aesthetic, moving away from the flamboyant style of his predecessor, Alessandro Michele. Unfortunately, the results were not as impactful as hoped, leading to a notable decline in sales. While his collection was wearable, it simply did not justify its luxury price tag.

Strategic Missteps and Financial Strain

Kering now faces not only creative hurdles but significant financial pressures. The company’s net debt soared from €3.9 billion in mid-2023 to nearly €10 billion a year later, exacerbated by high-profile acquisitions and real estate investments. The recent divestitures of key assets, such as stakes in prime Parisian real estate and luxury outlet malls in Italy, underscore a strategic shift to stabilize finances.

Looking Forward: The Path Ahead for Gucci

With Gucci’s identity and direction under scrutiny, Kering must navigate these troubled waters with a clear strategy. The challenge lies in redefining Gucci’s brand DNA and aligning it with both market expectations and its historical prestige. As industry insiders predict, the search for a new creative leader who can truly encapsulate and express Gucci’s ethos is critical but may prolong the brand’s recovery.

Conclusion

For Kering and Gucci, the road ahead is fraught with challenges. The luxury market’s evolving dynamics and consumer expectations demand a robust and resonant brand identity, something that has eluded Gucci in recent transitions.