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By Tassilo Hummel and Elisa Anzolin
PARIS/MILAN (Reuters) - Kering lost around $3 billion in stockmarket value on Friday after the group chose in-house talent Demna to reinvigorate its Gucci label rather than hiring one of fashion's big-ticket names as chief designer.
Kering's shares fell by up to 13% in morning trade in Paris and were on track for their worst day in almost a year following the appointment of Balenciaga designer Demna.
Although widely praised for his streetstyle-inspired looks and attention-grabbing showmanship at Balenciaga, many analysts said 43-year-old Demna - who was born in Georgia and is known by one name - was a risky pick for much larger label Gucci with its reputation for timeless elegance.
The fashion world had been eagerly anticipating news of the new design chief at Gucci, which generates nearly half of Kering group sales and two-thirds of operating profit, after the brand fired Sabato de Sarno in February as sales of its handbags, loafers and dresses kept sliding.
J.P. Morgan analysts called Demna's appointment a "controversial choice," citing early feedback on social media and fashion blogs and a "question mark" now hanging over the brand's creative future.
Kering did not immediately reply to a Reuters request for comment.
"Some investors are wondering: “Who is driving the bus?”, Bernstein analyst Luca Solca said, citing a string of bad news at the group including expensive brand and real estate acquisitions, several profit warnings and now the upheaval around Gucci's design chief.
Barclays analysts said choosing Demna rather than a famous external candidate like Hedi Slimane, Maria Grazia Chiuri or Pier Paolo Piccioli - three of the most-cited names by fashion watchers for the job - appeared as an attempt to make the label a global trend setter again.
PROLONGED SALES DECLINE
Gucci's prolonged sales decline, including a 24% drop in revenue in the fourth quarter of 2024 alone, has heavily weighed on Kering, with group shares down around 40% year-on-year while a European sector benchmark index was down only nearly 6% over the same period.
The group also recently lost Matthieu Blazy, its star designer at Bottega Veneta, who left to lead Chanel.
Sacking de Sarno was the first major decision under Gucci's new chief executive, Stefano Cantino, who took over the helm in January.
De Sarno's shift to minimalist and more timeless styles failed to gain traction with shoppers.
Kering executives said last month De Sarno helped the century-old label shift its focus back to more classic elegance, leaving a clean slate for his successor.