Michele, 49, helped turn the Florence, Italy-based brand into a fashion behemoth since he took over creative leadership at the start of 2015.
Gucci is three times the size it was when CEO Marco Bizzarri “took a smart punt on the hitherto unknown name and placed him at the helm of Kering’s dominant brand,” Flavio Cereda, an analyst at Jefferies, wrote in a note. “The next step is necessarily more complicated now,” with questions on the successor.
Will the designer be an internal versus an external replacement, will there be a divisional split, and will there be more leadership changes, especially at a time of volatile demand, Cereda asked. The ambition for Gucci to reach €15 billion ($15.6 billion) of sales in the medium term, which roughly means by 2027, seems “increasingly out of reach,” he added.
Michele’s fashions, recognizable for their flamboyant, bohemian-chic designs, have been worn by celebrities such as Jared Leto, Harry Styles and Florence Welch. Under him, Gucci also engaged in collaborations with other brands and companies, notably Adidas AG and North Face Inc.
Despite some progress, however, Gucci’s growth has lagged behind rival brands since the lifting of most Covid-19 restrictions, including fellow Kering label Yves Saint Laurent and LVMH’s fashion and leather unit, which is led by Louis Vuitton and Christian Dior.
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The brand is particularly exposed to China, which has been slower to loosen pandemic rules because of its Covid-zero approach. Earlier this year, Gucci named a former Tiffany & Co. executive, Laurent Cathala, to head the fashion unit in China and Hong Kong. Kering Chief Financial Officer Jean-Marc Duplaix told investors last month that Cathala may not be able to change performance overnight, and that the goal to boost sales there was long term.
Michele slowed the pace of creation when the pandemic struck, putting out fewer collections and fewer fresh designs. The brand plans to return to six collections next year, Duplaix said last month. On top of this, Gucci wants to further develop the menswear and travel categories, he said then.
Before the announcement of Michele’s departure, Gucci had announced he would be backed up by a “studio director,” who would help him for the main collection, without ever identifying that individual.
“It may well be time for a change,” RBC Europe Ltd. analyst Piral Dadhania wrote in a note to clients. The role at Gucci requires a designer willing to focus on the archives of the brand and to rebuild its heritage, he added.
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Gucci was founded in Florence in 1921 as a maker of luggage and other leather goods, and over the next several decades expanded in Italy, Europe and the US. In 1999, Pinault Printemps Redoute, as Kering was formerly known, bought a 42% stake and later took it over completely.
The acquisition of the Italian brand heightened the rivalry between Francois Pinault, the founder of Kering, and French luxury mogul Bernard Arnault, founder of LVMH.
Michele’s departure follows the surprise exit of Daniel Lee a year ago from Bottega Veneta, another Kering brand. Lee left for undisclosed reasons after a successful run, and recently joined Burberry Group Plc, where he’s scheduled to unveil his first rainwear collection in January.
Earlier this month, Estee Lauder Inc. announced the purchase of Tom Ford’s beauty line, a business Kering had also considered as the group seeks to expand its cosmetics and fragrance offerings, people familiar with the matter told Bloomberg News.
