Kering faces heavy short-selling as debt burden mounts ahead of new chief’s start

Luca de Meo will take the helm at Kering on Monday amid intensified short-selling and questions about the luxury group’s heavy borrowing, putting immediate pressure on the new chief executive to stabilise the business.

Short sellers now hold roughly 8% of Kering’s shares, market participants said, a markedly higher proportion than at peer LVMH, where short interest sits near 1%. The wagers reflect investor anxiety about Kering’s finances: the company’s debt is about £8.2 billion, equivalent to nearly a third of its £25.7 billion market valuation.

Shares in Kering, which owns Gucci, Bottega Veneta and Saint Laurent, have fallen more than 55% over the past five years as inflation, tariffs and a cost-of-living squeeze have weighed on demand for luxury fashion. The group’s debt pile and sliding share price have become immediate challenges for de Meo, who left Renault to succeed François‑Henri Pinault.

De Meo, who publicly signalled a tougher prioritisation of projects last week, said Kering would push back the planned acquisition of Valentino from the Qatari investment vehicle Mayhoola until 2028. The deal, struck under the previous management, could value Valentino at about £3.5 billion. The postponement is one of several moves analysts expect as the company reassesses capital allocation.

Gucci’s performance has been a particular concern. Sales at the brand were £2.6 billion in the first half of 2025, a decline of 26% from the same period a year earlier, hurt in part by a slowdown in China. Management has said arresting the brand’s decline is a top priority, and market watchers will observe how Gucci’s new artistic director, Demna Gvasalia, influences consumer demand when he unveils his first collection at Milan Fashion Week later this month.

Kering’s corporate structure has also attracted scrutiny. Some investors have questioned whether the group’s executive hierarchy — which includes two deputy chief executives — has contributed to strategic drift. François‑Henri Pinault remains a dominant figure in the group he inherited from his father, François Pinault, and the transition to new leadership comes amid calls for clearer direction.

Investors and analysts see potential growth areas that could help offset weakness in big‑ticket fashion purchases. The beauty sector, which has benefited from so-called "treatonomics" — consumers opting for smaller luxury purchases — is one such avenue. Observers noted that Kering may explore buying Gucci’s beauty licences from U.S. group Coty, which has faced its own market challenges; Coty’s shares are down about 54% over the past year.

De Meo has a record at Renault of reversing losses and overseeing product refreshes, but turning around a multi-brand luxury house will test different skills, analysts say. Any measures to reduce leverage, reallocate capital or monetise assets will be monitored closely by creditors and investors alike as the company seeks to restore market confidence.

Market reaction to the leadership change and the delayed Valentino deal underscores the fragility that can accompany highly leveraged positions in cyclical industries such as luxury goods. With short interest elevated and operating results showing pressure, Kering faces a narrow window to outline credible steps to shore up its balance sheet and revive brand momentum.

As the new chief executive assumes office, shareholders will watch for statements on de‑risking the balance sheet, plans for Gucci’s turnaround and any moves to unlock value from noncore assets or licensing arrangements. The group’s performance in the coming quarters, and consumer response to new creative direction at Gucci, will be central to assessing whether investor concerns subside.