The new boss of fashion giant Kering is facing a baptism of fire as short-sellers ramp up their bets against the group as it struggles with a mounting debt pile.
Around 8 per cent of the shares are held by short-sellers, who make their money by betting that a firm’s stock price will fall.
This is much higher than for rivals such as French group LVMH, whose brands include Louis Vuitton and Givenchy, which has only 1 per cent of its shares held by short-sellers.
These bets that Kering’s stock could drop are said to be based on anxiety over its borrowing, with its debt at around £8.2 billion, equivalent to nearly a third of its £25.7 billion market value.
The short-seller pressure presents an immediate challenge to Kering boss Luca de Meo, who takes over tomorrow.
Shares in Kering, which owns brands including Gucci, Bottega Veneta and Saint Laurent, have fallen by more than 55 per cent in the past five years as inflation, tariffs and the cost-of-living crisis have weighed on demand for luxury fashion.
Fashion forward: A model wears Bottega Veneta on the catwalk
To get the business back on track, de Meo, the former boss of Renault, said last week that Kering would delay its takeover of Italian label Valentino from the Qatari investment group Mayhoola until 2028.
This deal, which could value Valentino at £3.5 billion, was struck by former boss Francois-Henri Pinault, the son of Kering founder Francois Pinault. The younger Pinault, who is married to actress Salma Hayek, is head of a group many see as having too many top managers – it has two deputy chief executives.
Arresting the decline at Gucci is another priority. In the first half of 2025, its sales were £2.6 billion, 26 per cent lower than the same period last year, after a slump in demand in China. There are hopes that Gucci’s new artistic director, Demna Gvasalia, hired from Balenciaga, can revive its fortunes when he unveils his first collection at Milan Fashion Week this month.
In his five years as Renault boss, de Meo helped to reverse losses and oversaw the creation of the chic new version of the Renault 5.
But the route to reviving Kering is set to be more challenging for the fashion industry outsider. Beauty, a sector benefiting from the ‘treatonomics’ trend, where consumers opt for smaller luxury items rather than big-ticket purchases, is one avenue of potential growth.
Investors will be watching to see if de Meo buys Gucci’s beauty licences from US group Coty, which is struggling.
Coty, where shares are down 54 per cent over the past year, could be happy to sell.
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