Updated 5:10 p.m. ET Sept. 9
PARIS — Luca de Meo does not officially start as chief executive officer of Kering until Monday, but the Italian executive has wasted no time in setting his action plan in motion.
In his first public appearance since his nomination was revealed in June, the former Renault CEO told Kering shareholders he would present a detailed strategy next spring, but will start implementing his turnaround plan for the ailing French luxury group before the end of this year.
Dragged down by steep declines at its star brand Gucci and a bulging debt load, Kering is closing stores, selling real estate and reducing headcount after a dismal start to the year that saw group net profit plummet 46 percent in the first half.
At a combined general meeting at Kering headquarters on Tuesday, de Meo suggested there was more pain in the cards, but added that he was confident the group would rebound, despite a global slowdown in luxury spending.
“We will initially focus our efforts on the most effective levers to improve the quality of our capital allocation and generate a tangible operational rebound,” he said in a speech.
“We will have to continue to reduce our debt, cut our costs and, where necessary, rationalize, reorganize and reposition some of our brands,” de Meo added.
“We are going to consolidate the foundations of our houses and build a luxury group that is even more integrated, more agile and driven by a strengthened competitive spirit,” he said. “Above all, we will not wait for the strategic plan to be finalized to act.”
Shareholders voted by a crushing majority of 98.97 percent in favor of appointing de Meo as a director, following the splitting of the chairman and CEO roles, both held by François-Henri Pinault for the last 20 years. Pinault remains chairman of Kering.
They also approved de Meo’s sign-on bonus of 20 million euros, largely to compensate him for long-term variable remuneration elements he relinquished when he exited Renault Group. This will consist of 15 million euros in cash and 5 million euros in Kering shares.
He will receive a portion of a fixed annual salary of 2.2 million euros in 2025, plus annual variable remuneration of 1.21 million euros, contingent on his successful onboarding and progress in defining the strategic plan with the board of directors.
Shareholders also OK’d a resolution raising the age limit for the chairman of the board to 80 from 65, and the age limit for the CEO to 70 from 65. De Meo is 58 and Pinault is 63.
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Having navigated the family-controlled conglomerate through multiple transformations, Pinault said he was ready to hand over the baton to someone with a fresh outlook.
“He is a strategist, a builder and a man who understands brands,” Pinault told the assembly, noting de Meo’s track record of managing companies in the automobile sector.
“He will be able to find new avenues of growth for our group,” he added. “He knows how to act quickly and efficiently.”
Pinault reiterated that the group would continue refinancing real estate, and is working on finding partners for its properties on Fifth Avenue in New York City and Via Monte Napoleone in Milan.
Asked whether Artémis, the Pinault family’s holding company, would consider selling its 29 percent stake in German sporting goods firm Puma to reduce its debt load, he noted it is “not a strategic asset” and Artémis was “keeping all its options open.”
Speaking to reporters after the meeting, de Meo, dressed in a navy Brioni suit with a snappy four-pointed pocket square, appeared sanguine about the task ahead. He spent the summer on a listening tour, and believes he can bring a fresh perspective to a sector undergoing a deep transformation.
“It’s what I always do: I try to talk with investors, media, analysts, people who were there and who left, and so forth, to form an opinion from the outside. And now I’m going to compare it with what I see inside the company and what the teams tell me,” he said.
“This way, I’ll be able to crystallize a middle position and make good decisions,” he said. “I see a lot of potential. The brands are incredible.”
De Meo confirmed he would attend creative director Demna’s debut for Gucci on Sept. 23 during Milan Fashion Week, letting slip some details of the eagerly awaited presentation. “It will be a film that sets out Demna’s vision of how he sees Gucci. I haven’t been allowed to see it yet,” he said.
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The executive sees undeveloped potential in segments including jewelry and cosmetics, though he declined to comment on a report in French daily Le Figaro that he was considering granting the Gucci beauty license to L’Oréal Group after its current agreement with Coty expires.
While declining to go into details, de Meo said it was crucial to act quickly to restore investor confidence. “We obviously have to try to get some mojo back with the market,” he said.
That means acting on multiple fronts. “There are lots of things to tackle at the same time, but I’ve already been through much, much tougher turnaround situations,” de Meo added.
Board member Serge Weinberg, who was CEO of Kering in its previous incarnation as PPR and who now heads the group’s appointments committee, said it mandated two recruitment firms to search for an executive with international experience capable of navigating complex environments.
Kering looked at 40 candidates, both internal and external, before shortlisting five. Weinberg touted de Meo’s luxury experience as a former member of the supervisory boards of Ducati and Lamborghini, as well as his managerial qualities, extolling his integrity, team spirit and listening skills, among others.
De Meo said the tipping point for him was meeting Pinault. “One of the reasons I decided to come to Kering was for him: for that instant relationship we formed, the chemistry we felt in the space of half an hour when we first met,” he said.
As he spoke, Pinault leaned over the scrum of journalists to gently remind de Meo that he had a board meeting to attend, prompting a round of laughter.