Kering, the parent company of Gucci, confirmed a report indicating that its shares and those of Renault saw significant changes on Monday, which may help rejuvenate the luxury conglomerate burdened with debt.
The new appointee, who comes from a background in the automotive industry, will become the first non-family member to lead the company controlled by the Pineau family of French billionaires. The transition is set for September 15th.
This bold transition underscores the significant challenges Kering is facing, as highlighted by investors and others in the industry.
Francois-Henri Pinault, who De Meo will succeed as CEO, stated that the group’s recent performance has not lived up to expectations, signaling a need for a fresh perspective through new leadership.
Pineau expressed confidence in De Meo’s experience with international companies and his understanding of brand dynamics, indicating that these qualities were pivotal in his selection for the role.
Despite stepping down, Pineau will continue as chairman and plans to stay active in strategic decisions, indicating he wants to respect the new CEO’s authority regarding priorities and key appointments.
While Gucci has been a driving force behind Kering’s growth, the brand has struggled to regain momentum after the pandemic. The company is currently dealing with over 10 billion euros (about $11.6 billion) in debt, putting it at risk of a credit rating downgrade.
For Renault, De Meo’s sudden exit marks a significant setback. Reflecting on his tenure, it’s noted that he made considerable changes, including revamping a strategic partnership with Nissan.
Turnaround Skill
Renault announced on Sunday that De Meo would depart mid-July for opportunities outside the automotive field.
The announcement of his transition to Kering caused a notable rise in the company’s shares, which increased nearly 12% on Monday—the highest daily jump since November 2008.
In contrast, Renault’s stock dropped about 8%, marking its steepest decline since February 2022.
De Meo’s move to Kering comes as the luxury group struggles to regain investor confidence, with its stock losing two-thirds of its value over the last five years.
Some analysts suggested that while bringing in someone from outside the luxury market might be considered risky, De Meo’s credentials could make him a suitable leader for Kering. They pointed out that his experience in transformative leadership and marketing could be particularly beneficial.
This unexpected departure is the second high-profile exit from a European car manufacturer in just six months, following Carlos Tavares’ resignation from Stellantis.
The automotive sector has faced numerous challenges recently, including trade tariffs and stiff competition from Chinese manufacturers.
A spokesperson for Renault remarked that De Meo’s exit would not hinder the company’s medium-term strategic plans, though analysts from JP Morgan expressed concerns about its potential impact.
De Meo joined Renault from Volkswagen in 2020, leading during a period marked by record losses due to the sales slump created by the pandemic.
As CEO, he initiated several cost-cutting measures, reducing workforce and production capacity globally, which helped streamline Renault. He also worked to improve a complex partnership with Nissan.
De Meo reassured Renault staff that his decision was personal and not an indication of fleeing the company, emphasizing that Renault is well-positioned for its next phase.
Interestingly, Renault was among the few automakers that didn’t issue profit warnings last fall.
