Kering’s shares took a beating on Friday as they fell 10% after the French luxury giant announced the new creative lead for its biggest brand, Gucci.
Demna Gvasalia, a Georgian-born designer who has been the artistic director at Balenciaga for a decade, will start his new role in July and be tasked with steering Gucci through a tumultuous period to regain its mojo.
The highly anticipated appointment was announced Thursday, just over a month after Gucci announced the departure of Sabato De Sarno, who had been the creative head for only two years. Gucci—and as a result, Kering—has been under pressure to boost performance and make the once-alluring maximalist brand relevant again in the luxury sector.
Demna, as he is called in the fashion industry, will bring his experience at Kering-owned Balenciaga to Gucci, even though the brands’ aesthetics and audience are different.
“Demna’s contribution to the industry, to Balenciaga, and to the Group’s success has been tremendous. His creative power is exactly what Gucci needs,” Kering’s chairman and CEO François-Henri Pinault said in a statement.
While Pinault and Gucci CEO Stefano Cantino are confident this will work, investors were caught by surprise. The announcement caused Kering’s market valuation to fall by as much as €4.25 billion on Friday.
Big shoes to fill
Demna’s legacy at Balenciaga features bold, opinionated designs. Some of his fashion shows reimagined the runway in his unique way—for instance, his 2022 show at the Paris Fashion Week was themed around climate change and the Ukraine war. He was the brain behind several memorable fashion moments, including the $1,800 viral trash bag, the $1,850 “destroyed” sneakers, and the $2,000 blue Ikea bag lookalike.
“Demna has a strong viewpoint — he was fashion’s wunderkind between 2014-2020 — which is the secret sauce for a brand like Gucci,” Bernstein SG analyst Luca Solca wrote in a note. He added that Demna’s “iconoclast” ideas worked for a small brand like Balenciaga (estimated to be worth €2 billion compared to Gucci’s nearly €8 billion). Still, they may not work for a storied brand like Gucci.
“Overall we would give this appointment a 5/10, as we are not sure that Demna measures up to the task, nor that he is the right fit for Gucci at the moment,” Solca said.
Past creative directors at Gucci didn’t come with the same pedigree as Demna. De Sarno was at Valentino before he joined Gucci, but not as a creative director, while his predecessor Alessandro Michele (currently at Valentino) was an internal hire.
To Demna’s credit, when he joined Balenciaga in 2015, it was estimated to be worth a small fraction of what it is today—€390 million. He has successfully grown it into a major brand within the luxury sector, adorned by the likes of Kim Kardashian, Serena Williams, and Nicole Kidman on red carpets.
Demna’s time at Balenciaga also had its fair share of conflicts. Its 2022 holiday campaign featuring children posing alongside bondage teddy bears drew accusations of endorsing child abuse and pornography. Balenciaga apologized for the ad and took down the items on sale. That scandal impacts Balenciaga’s sales for a brief while, particularly in the U.S.
Demna will have his start at Gucci in July, a bit late for a Spring/Summer 2026 showcase. That means it’ll be a while before the fashion industry can sense-check his designs for Gucci.
A lot rides on Gucci’s revival: it’s by far Kering’s largest brand and crown jewel. The French luxury company’s full-year sales were down 12% in 2024, with Gucci’s revenues plummeting 23% to €7.7 billion. That’s not a good sign for any company, and certainly not for one of the luxury realm’s most influential players amid broader turmoil in the sector.
With Demna’s appointment, Gucci’s fortunes could finally see a reversal—or at least that’s what Cantino argues.
Demna’s “understanding of contemporary culture, of what is luxury today and a deep understanding of the new generation” will be vital to Gucci in its current phase, Cantino told the New York Times.
Representatives at Kering didn’t immediately return Fortune’s request for comment.
