Hours before a star-studded runway show at the Tate Modern museum in May, Gucci’s billionaire owner, François-Henri Pinault, huddled with his newly installed leadership team at its London office to figure out where one of the world’s most iconic brands was headed.
With his wife, actress Salma Hayek, preparing for the show at a nearby hotel, Pinault pushed his team to define where Gucci should position itself in the market: higher than it is but not too high. His executives presented plans to pare back the many iterations of the interlocking GG logo and better harmonize the brand’s aesthetics. The idea was to make Gucci’s famously wild fashions a bit more timeless, a bit less subject to the whims of aspirational shoppers chasing the latest trends.
Such meetings hadn’t been a usual part of Pinault’s playbook—but they are quickly becoming one. After years of ceding substantial power to brand chiefs, Pinault is asserting more control over the operations of the myriad fashion houses that make up his family’s conglomerate, called Kering.
The shift is big and difficult. Pinault wants Kering’s brands to be less reliant on buzzy trendsetters—who are influential but fickle—and favored by more enduring, aesthetically conservative big-spenders. The plan seeks to move the brands closer to luxury stalwarts like Hermès and Chanel, whose products don’t tend to go out of fashion.
To do all this, Pinault has implemented the biggest shake-up of Kering in years, designed to better manage the execution of strategies at each of the brands, which include Saint Laurent and Balenciaga.
The conglomerate was founded by Pinault’s father more than 60 years ago. Under both father and son, it has been distinguished by the considerable autonomy it grants its brands. Lately, though, that model has been less effective, as the company’s revenue and share price have tumbled.
The younger Pinault, now 62 years old, is scrambling to turn things around.
Over the past year, Pinault has more deeply involved himself in what he calls elevation strategies for his brands, ensuring that every action taken—including in real-estate strategy, marketing, and product development—will enhance the brand in the long term.
“For him, it’s a personal challenge,” said Serge Weinberg, a Kering board member who was previously the company’s chief executive.
It’s proving to be an uphill battle. Analysts expect sales at Gucci—the largest contributor to the group’s revenue—to be down almost 20% for the first six months of the year when Kering reports earnings next week, hit particularly by a sharp decline in the Asia-Pacific region.
Aspirational shoppers, the less-wealthy buyers on whom Gucci heavily relies, are the first to close their wallets when the economy sours, as is happening today—especially in China, Gucci’s largest market. At the same time, Gucci’s new, more restrained aesthetic has drawn mixed reviews from critics and shown little sign of juicing its sales.
At the company’s annual general meeting in Paris in the spring, Pinault faced tough questions from investors. Since March 2020, shares of LVMH have more than doubled while those of Hermès have more than tripled. The surge briefly made LVMH CEO Bernard Arnault the world’s richest person and the Hermès family the wealthiest in Europe. Meanwhile, Kering has lost about a quarter of its value.
“You’re disappointed, you’re frustrated,” Pinault told investors at the meeting. “Me too. I’m the first, be sure of that.” Pinault’s family holds a 42% stake and 59% of the voting rights in Kering, accounting for most of the family fortune, estimated at more than $25 billion.
Reflecting on the past five years, Mimma Viglezio, a former vice president at Gucci Group who now consults for fashion companies, said Pinault had appeared to be “totally reactive” to events, rather than putting in place a long-term vision.
“What I don’t see behind this is a clear strategy,” she said.
Pinault was born in the city of Rennes in western France, the second child from François Pinault’s first marriage, to Louisette Gautier. Pinault’s father was a high-school dropout who parlayed his family’s small sawmill into Europe’s biggest nonfood retail group—running department stores, an electronics chain and a mail-order business—before buying up several luxury brands.
Pinault’s father has said that he knew from the time his three children were teenagers that François-Henri would be the one to take over the growing empire. At 17, Pinault moved to Paris.
After graduating from HEC Paris, one of France’s top business schools, Pinault started at the bottom at the family business, working as a salesperson in wood and building-material depots. He soon found himself managing a factory in Brittany through a strike, during which a far-left union barricaded the young executive in his office.
“I took my first steps as a professional quite far away from the glossy magazines and the fashion world,” he recently told a group of graduates at HEC.
Pinault worked his way up to managing the conglomerate’s wood and building-materials division, which he steered through a severe real-estate downturn in France.
When Pinault sought his father’s advice, the response was curt: “Figure it out yourself.”
In 2005, Pinault was appointed CEO of the conglomerate.
The younger Pinault wasn’t content to simply manage what his father had built. He soon proposed to steer the group in a new direction: transforming the conglomerate into a luxury leader. At that time, the company’s luxury brands made up just over 10% of the sales of the conglomerate then known as PPR.
Father and son are very different, people close to the family say. “The father had a hunter’s instinct,” said Weinberg. In contrast, the younger Pinault is perceived as more cautious, in part because of his perspective on managing the business for his siblings and the next generation.
Pinault recently welcomed his son, 26-year-old François Louis Nicolas Pinault, to the board of Christies, the auction house the family owns. The move possibly lays the groundwork for a third generation to run the company.
In Paris, Pinault regularly shares tête-à-tête dinners with his father, who is now 87 years old and dedicates much of his time to his contemporary art collection. Their conversations span various topics, including business. For significant business decisions, Pinault informs his father and gauges his reaction. Pinault especially values his father’s intuition about people.
Pinault’s longstanding strategy has been to put his trust in duos of designers and chief executives that he hires, handing them the keys to the label.
Starting in 2012, Pinault appointed creative directors with broad remits to oversee products, communication and image. Hedi Slimane took charge at Saint Laurent, Alessandro Michele at Gucci, and Demna Gvasalia at Balenciaga. His star-focused approach differs from rival LVMH, where Arnault doesn’t center the entire creative vision of brands like Louis Vuitton on a single person.
In 2015, this approach began to pay dividends. At Gucci, Michele’s eclectic and vibrant designs, which blended colorful streetwear, historical influences, and bold animal prints, received critical acclaim and captivated consumers from New York to Beijing.
As sales soared, Pinault talked openly about Gucci catching the industry leader. “The potential of Gucci might be the same potential as Louis Vuitton, yes, over time,” he told the Financial Times in 2018. “Why not?”
By 2019, the Italian brand’s sales had more than tripled to almost 10 billion euros. But brand studies produced for Pinault were showing that several consumer segments were losing interest in Gucci as shoppers grew tired of Michele’s instantly recognizable look and his use of pop-culture logos like Mickey Mouse. Most concerning of all to Pinault and his deputies was that Gucci was too reliant on so-called aspirational shoppers.
Pinault huddled in Milan with the brand’s CEO, Marco Bizzarri, and Michele. They wanted Michele to tone down the collections, making them less seasonal and less flamboyant, focusing instead on creating pieces that wouldn’t go out of style. He also wanted Gucci to make its products a little less available.
One of the main issues: Gucci had traditionally sent its unsold items—around 8% to 10% of production during those years—to discounted channels, including private sales and outlet stores that were mostly in Asia. When the brand’s overall production and sales soared, that percentage held steady, meaning the quantity of discounted products also rose. That caused the perceived exclusivity and luxury status of the brand to drop.
This led to Gucci entering the Covid boom in luxury goods in a slump. While other brands took off as consumers redirected their spending from holidays and dining out to handbags and other luxuries, Gucci’s sales declined, particularly as Chinese consumers grew weary of its designs.
On top of that, Pinault was hit by a crisis at Balenciaga. The brand faced a tsunami of condemnation over two ad campaigns, with critics accusing the brand of promoting the sexualization of children. That led to protests at a number of its stores and hurt sales heading into the crucial holiday shopping season of 2022.
An internal review of the company’s crisis management in the subsequent months concluded that some wrong decisions were made, in part because the decision-making process and the roles of those involved wasn’t clear to everyone.
Despite this, Pinault decided to keep Balenciaga’s CEO and creative director in place.
“We are allowed a mistake at a group like Kering. We are not allowed to make the same mistake twice, but we are allowed a mistake,” Pinault told reporters.
In the fall of 2022, Pinault ran out of patience at Gucci. He replaced Michele with Sabato De Sarno, a behind-the-scenes figure who spent years at Gucci competitor Valentino. Six months later, he replaced Bizzarri with Jean-François Palus, a longtime collaborator and friend he had first met in college. Pinault also changed a number of other top executives at Gucci, including naming a new chief brand officer, a new chief operating officer and a new communications director.
After almost a decade without a major acquisition, Pinault also returned to big-ticket dealmaking. Kering paid more than €3 billion to acquire high-end French fragrance label Creed in June 2023 and purchased a large stake in Italian label Valentino in July of that year. His family investment company also agreed to buy a majority stake in Hollywood talent agency Creative Artists Agency, helping the family to diversify beyond Europe and its core investments in the luxury-goods industry. (Hayek is a CAA client.)
Last September was supposed to be Gucci’s big comeback moment. De Sarno was showing his first collection as the new creative director during fashion week in Milan. Followers of fashion from Los Angeles to Shanghai were eager to see what he would do.
The wild patterns and bright colors were gone. The new style was quiet and elegant.
As he took his seat in the front row alongside Julia Roberts and Ryan Gosling, Pinault asked for patience. “The climax doesn’t happen right away,” he told a group of reporters. “Sometimes it’s the second or third show that is more important.”
Today, Pinault is telling investors that he feels things are on the right track. De Sarno’s new collection is gradually being rolled out.
At Pinault’s urging, Gucci has also cut its distribution network to become more exclusive. In the most recent quarter, 90% of Gucci’s sales came from its own retail network, and De Sarno’s new collection has not been delivered to independent retailers or e-commerce websites. The executive changes atop Gucci have continued, with a new deputy CEO joining in May from Louis Vuitton. A new chief commercial officer is set to join in August, and a new chief digital business officer will start in September.
Pinault has also beefed up his team at the parent company to help Gucci and the conglomerate’s other brands move upmarket. Led by his deputy CEO in charge of brand development, Kering has made several significant decisions this year, including pulling all the brands from the e-commerce platform Farfetch, shutting off wholesalers who sold products outside the normal distribution channels, and closing a number of boutiques that were not considered to be in sufficiently exclusive locations.
On a recent Saturday, Pinault delivered the graduation address at his alma mater, HEC. He recounted how he had taken over the group from his father and turned it into one of the world’s top luxury conglomerates.
“Never take anything for granted,” Pinault told the graduates. “Success is short-lived. What is difficult is to last, what is difficult is to keep up with the times and always, always stay one step ahead.”
Write to Nick Kostov at nick.kostov@dowjones.com