Paris – Luxurious analysts were plump to name Gucci’s famous creative directors to turn prominent businesses around, but they look slimy at Demna’s choice that made Balenciaga the side term for underground, street-wise and hype collaborations.
“Dem’s choice was a surprise to us given his bold, sometimes controversial aesthetic. At this stage, I think the announcement poses as much risk as the opportunity,” Barclays analyst Carol Madho wrote in a research note on Friday.
Investors appear to agree, sending Kering’s shares, stabbing 11.2% in an early trading in the Paris Blues.
She asked about the face of Italian Megabaland after focusing on two years of “timeless” offerings. “Gucci is currently shifting gear completely to focus on being a fashion authority.”
Demna, a designer of the Georgian dynasty who recorded 10 years in Balenciaga, will replace Sabato de Sarno. Demna will start with Gucci after the Balenciaga Couture Show on July 9th.
Maggio warned that the dystopian, gritty, underground-skewed Demna aesthetic “may not resonate with Gucci’s consumers,” and that, like Balenciaga in 2022, his “edgy, sometimes provocative” approach could spell out the trouble, as he did for Balenciaga when he realized that the ad campaign was exploiting children.
“This episode has had a major impact on brand performance for over a year, especially in the US,” Barclays said. “It’s also important to note that as designers will be taking part in July, it’s unlikely that his products will be available in stores before 2026.”
At Bernstein, analyst Luca Solka rated Demna’s appointment five out of ten.
“He’s ironic in the iconic crust. This is good for paying attention to small brands like Balenciaga, which estimates around 2 billion euros,” Solca wrote in his research notes. “But I don’t know if the strategy will work for bigger brands too. That denies the point of selling exclusivity by millions.”
Additionally, analysts said, “Street Style – his bread and butter – also seem outdated. Between 2017 and 2022, Balenciaga remained at the top of LYST’s hottest brand index, but then fell from the top 10.
“I’m not sure if Demna is measuring up to the task, or that he’s suited to Gucci at this point, but I understand risk minimization strategies.
TD Cowen analyst Oliver Chen had a more positive view.
“Gucci, which leads Gucci, needs to promote commercial, cultural and artistic influences that can support (long-term) growth,” he wrote in his research notes Friday. “Dem could be a great leader in Gucci’s next era.”
Chen highlighted the long-term, loyal fan base of the designers. His ability to lead young and new customers to a style of “contemporary sensibility.” And his collection’s “Strong Theatre and Brilliance,” “It tends to drive topics, cultural relevance, and drama.
“His latest shows include Taylor Drucks, highlighting his range beyond streetwear, and also documenting suits, women’s,” he added.
Balenciaga is a ready-made collection for fall 2025 at Paris Fashion Week
Giovanni Giannoni/WWD
Erwan Rambourg, global head of consumer and retail research at HSBC, said Demna “emphas the experience and gravity of its role. Demna is also well-versed in the kelling process and culture, which has the advantage of promoting it internally.”
However, investors may question why Kering “didn’t hire outside first when he kept talent on hand for two years. This could be another case of “Kering always makes the right decisions, but two or three years too late.”
He also questioned why Kering didn’t communicate with the next internal designer when he announced the departure of De Sarno on February 6th.
According to analysts at JP Morgan, Dem’s choice is “controversial based on early feedback on previous social media and fashion blogs.” This appointment raises “a question mark at this point about how the brand code evolves.”
According to Piral Dadhania and Richard Chamberlain of RBC Capital Markets, Gucci’s choice is “surprising to investors who expect external designers and who don’t seem to guarantee this appointment. We recognize Demna’s success in Balenciaga, but we fear that this appointment at Gucci will not be enough to meet the expectations of both consumers and investors.”
The Oddo BHF analyst said the choice was “rather disruptive. We were in favor of a true new start for Gucci, accompanied by some stylistic rupture.”
An analyst at Equita Sim said, “If the new creative director is Gucci, and we can adjust the necessary balance between timeless elegance on the one hand and fashion and creativity on the other hand. We also believe that it will take several quarters to make a concrete impact on sales.”
Gucci lost steam from the outlet of creative director Alessandro Michele in 2022. Alessandro Michele ignited the brand’s Renaissance, which raised it to nearly 10 billion euros with his vibrant retro design, until the market was exhausted.
Gucci reported a 24% decline in organic revenue in the three months ended December 31st. This was worse than analysts’ forecast of a 23% decline. In 2024, the brand accounted for 63% of parent-karing’s operating profit.
