Shares of Gucci-owner Kering pop 7% on reports Renault's de Meo to be next CEO

Shares of French manner location Kering popped 7% connected Monday connected reports that it has appointed manufacture outsider Luca de Meo arsenic radical CEO. It comes arsenic the proprietor of beleaguered brands Gucci and Saint Laurent embarks connected the latest signifier of its turnaround effort.

Auto seasoned de Meo's departure arsenic CEO of Renault was confirmed Sunday, with the French carmaker saying successful a connection that helium was stepping down "to instrumentality connected caller challenges extracurricular the automotive sector."

De Meo's determination to Kering was archetypal reported by French paper Le Figaro connected Sunday. Kering declined to remark connected the reports erstwhile contacted by CNBC.

Kering shares were trading up 7.2% by 8:34 a.m. London clip arsenic investors and analysts cheered the reports. Renault shares, meanwhile, shed 7%.

"Brand absorption and selling are [de Meo's] forte, which dovetails with what the luxury manufacture does," Bernstein analysts wrote successful a enactment Monday.

De Meo is seen arsenic having a beardown way record, having worked successful the car assemblage for implicit 30 years, including astatine Toyota, Fiat and Volkswagen. The Italian is mostly credited with Renault's turnaround during his 5 years astatine the helm, with shares up implicit 90% implicit the period.

The challenges facing the luxury assemblage nevertheless loom large, with Kering among the biggest laggards arsenic shoppers person fallen retired of emotion with its prima Gucci label. Kering shares person shed implicit 60% successful the past 2 years, sparked by a bid of nett warnings and decorator changes astatine Gucci.

Kering's existent CEO and president François-Henri Pinault, a subordinate of the household that controls the group, has held the apical jobs for 2 decades but is actively moving connected his succession, according to Reuters, citing sources. Pinault reportedly intends to divided the roles of seat and CEO, according to the sources. It was unclear whether helium volition stay chair.

Thomas Chauvet, elder equity expert astatine Citi, commended de Meo's turnaround of Renault, including his clasp of technological innovation and the brand's elevation. However, helium noted that the challenges of the prospective caller relation would beryllium significant.

"Execution of luxury marque turnarounds has go much complex, lengthy, costly, and acold little public-market-friendly, reflecting user penchant for apical brands alternatively than those successful modulation and important P&L disruption from greater concern commitment," helium wrote successful a note.

"There is inactive a sizeable magnitude of enactment up astatine Gucci and Saint Laurent ... to rejuvenate some brands and make a dependable watercourse of gross and currency travel for the group, which, if achieved, could effect successful important aggregate re-rating," helium added.