Kering’s Governance Crisis and the Risks of a Constrained Succession Plan

The luxury sector has long been a theater for dynastic power struggles, where family-controlled conglomerates balance tradition with innovation. Kering, the French luxury giant owning Gucci, Balenciaga, and Saint Laurent, now finds itself at a crossroads. The recent appointment of Luca de Meo—a former Renault CEO with no luxury experience—as Kering’s new CEO, coupled with François-Henri Pinault’s transition to chairman, has sparked intense scrutiny. While the move initially boosted Kering’s stock by 12% [2], the underlying governance risks remain unresolved. The Pinault family’s entrenched influence, combined with a succession plan that leaves the former CEO in a pivotal strategic role, raises critical questions about de Meo’s autonomy and Kering’s ability to execute meaningful reforms.

The Pinault Dynasty’s Grip on Kering

The Pinault family’s control over Kering is both a strength and a vulnerability. Through their holding company, Groupe Artémis, the family owns 42% of Kering’s shares and 59% of its voting rights [4], ensuring their dominance over strategic decisions. This structure, while providing stability, also creates a tension between family interests and market demands. François-Henri Pinault, who has led Kering for over two decades, has been instrumental in reshaping the company’s identity—from a diversified industrial group to a luxury powerhouse. However, his tenure has also been marked by costly acquisitions, a revolving door of top executives, and a heavy reliance on Gucci, which still accounts for over half of Kering’s profits [1].

The recent leadership transition—where Pinault steps down as CEO but retains the chairman role—has not alleviated these concerns. De Meo, though granted operational control, inherits a boardroom where the Pinault family’s shadow looms large. As Bloomberg notes, investors are now “questioning whether Pinault will allow de Meo the freedom to address the company’s deepening challenges” [1]. This ambiguity is compounded by the family’s deliberate succession planning, which has already begun grooming the next generation. Three family members under 38 have joined Artémis’ board, signaling a long-term strategy that may prioritize continuity over disruptive change [1].

De Meo’s Autonomy: A Double-Edged Sword

De Meo’s appointment is a bold gamble. Known for turning around Renault through aggressive restructuring, he brings a track record of operational efficiency. Yet his lack of luxury sector experience—and the Pinault family’s continued strategic oversight—poses significant risks. The luxury market thrives on brand integrity and creative coherence, areas where de Meo’s automotive background offers little direct insight.

The challenge is twofold: first, de Meo must navigate Kering’s internal dynamics, where the Pinault family’s influence permeates key decisions. Second, he must address external pressures, including Gucci’s 25% quarterly revenue decline and a broader slump in Chinese demand [4]. While de Meo has been granted “authority to appoint key roles and define strategic priorities” [2], the absence of clear boundaries between his role and Pinault’s chairmanship creates uncertainty. As one analyst observes, “The success of this transition hinges on whether de Meo can operate independently or if the Pinaults will micromanage a strategy they’ve yet to fully endorse” [3].

Strategic Stagnation and Valuation Risks

Kering’s governance structure is not merely a leadership issue—it is a valuation risk. The company’s stock has lost nearly two-thirds of its value since 2021, with the Pinault family’s net worth plummeting from $59 billion to $23 billion [1]. This decline contrasts sharply with LVMH’s dominance, where Bernard Arnault’s centralized control and transparent succession planning have bolstered investor confidence. Kering’s struggles highlight a broader trend: family-controlled firms in the luxury sector face heightened scrutiny when governance and strategy diverge.

The risks are further amplified by regulatory and reputational pressures. Kering’s greenwashing litigation, for instance, has already triggered a 7% drop in Gucci’s share value [1]. As global sustainability standards tighten, brands must align ESG commitments with operational transparency—a task that requires decisive leadership. Yet with de Meo’s autonomy constrained by the Pinaults’ strategic vision, Kering’s ability to adapt remains uncertain.

Long-Term Implications for Shareholders

For shareholders, the stakes are clear. A constrained succession plan risks prolonging Kering’s underperformance, eroding trust in its leadership model. The luxury sector’s valuations, which rely on consistent growth and brand differentiation, are particularly sensitive to governance instability. If de Meo fails to stabilize Gucci or reinvigorate Kering’s portfolio, the company could face a prolonged period of underperformance, further widening the gap with competitors like LVMH.

Moreover, the Pinault family’s gradual transfer of power to the next generation may prioritize long-term family cohesion over short-term profitability. While this approach has historically ensured stability, it risks alienating investors who demand immediate results. As one Bloomberg commentator notes, “The Pinaults have built an empire on patience, but patience is wearing thin in the luxury sector” [1].

Conclusion

Kering’s governance crisis is a microcosm of the broader challenges facing family-controlled conglomerates in the luxury sector. The Pinault family’s influence, while a source of strength, also creates a paradox: it enables strategic continuity but stifles the agility needed to address market shifts. Luca de Meo’s appointment is a test of whether Kering can balance tradition with transformation. For now, the jury is out. Investors must weigh the potential for a turnaround against the risks of a succession plan that remains, at its core, a family affair.

**Source:[1] Gucci Owner's Fortunes Rest on Heir Letting New CEO Do ... [https://www.bloomberg.com/news/articles/2025-09-05/gucci-owner-s-fortunes-rest-on-heir-letting-new-ceo-do-his-job][2] Renault CEO set to lead Kering [https://www.linkedin.com/news/story/renault-ceo-set-to-lead-kering-6445404/][3] Will Luca De Meo Bring the Required Turnaround at Kering? [https://saadiyatcap.substack.com/p/will-luca-de-meo-bring-the-required][4] Pinaults’ Artemis Says Not Facing Financial Strain Despite Kering Woes [https://www.businessoffashion.com/organisations/kering/]