Kering

Demna Gvasalia, former creative director of Balenciaga, will take over as artistic director at Gucci starting in July.

Demna has built an outstanding track record at Balenciaga over the past decade, but it remains too early to determine whether his style and vision will reignite Gucci’s momentum. Balenciaga and Gucci have distinctly different brand positions and target clientele.

Yesterdays ‘ Kering’s ADRs were 6.6% down after the announcement of the appointment.

This decision is a gutsy one but the difference in style between Balenciaga and Gucci means that many investors question whether Demna Gvasalia, no matter how gifted he is, is the right pick for the position. It seems unlikely that Kering share price will recover unless there is a sharp and long lasting turnaround at Gucci. Despite the poor performance and the relatively low valuation, we believe it is way too early to play such a turnaround in our opinion.