What Do Gucci and Unilever Have in Common?

Much is at stake for both companies after some surprising leadership changes, including a possible breakup at the consumer goods group.

Andrea Felsted

30 Jan 2023, 07:25 PM IST

Alan Jope, chief executive officer of Unilever Plc, during a panel session on the opening day of the World Economic Forum (WEF) in Davos, Switzerland, on Tuesday, Jan. 17, 2023. The annual Davos gathering of political leaders, top executives and celebrities runs from January 16 to 20.

(Bloomberg Opinion) -- What do Italian luxury house Gucci and Unilever Plc, the maker of Ben & Jerry’s ice cream, have in common? They’ve both recently appointed relatively unknown individuals to crucial leadership roles.

At Kering SA’s Gucci, Sabato De Sarno, a senior designer at privately held Valentino, will become creative director of the 10 billion-euro ($10.9 billion) brand. Meanwhile, Unilever named outsider Hein Schumacher as chief executive officer succeeding Alan Jope, who leaves this summer.

There is a huge amount at stake for both companies, but Unilever is the one facing a possible breakup. Unless the surprise appointment improves the consumer-goods group’s performance, Unilever is likely to hear calls to split the business.

An external executive to succeed Jope — a Unilever lifer — is welcome news. Although Schumacher joined the Unilever board in October, he is currently CEO of Dutch dairy cooperative Royal FrieslandCampina, where he has shaken up both the portfolio and the organization — something that Unilever desperately needs. (Interestingly, Cees ‘t Hart, who has successfully steered Carlsberg NV as CEO for more than seven years, was also recruited from the Royal FrieslandCampina.)

Schumacher has other relevant experience. He spent over a decade at H.J. Heinz, including when it was owned by 3G Capital and Warren Buffett. Some of Kraft Heinz Co.’s cost-cutting prowess would be useful at Unilever. It’s perhaps no surprise that he also has the blessing of activist investor Nelson Peltz, who became a non-executive director at Unilever last July, after his Trian Fund Management built a stake in the company.

But Schumacher is not a big name CEO from a US or European powerhouse with a proven track record. And his background is in food, whereas Unilever’s future is arguably in personal care and beauty, not groceries. (Of course, past needn’t define future: Nestle SA CEO Mark Schneider came from medical-care company Fresenius SE, and he hasn’t turned Nestle into a healthcare company.)

Investors were giving Schumacher the benefit of the doubt on Monday, with the shares up as much as 1% in early trading.

What Do Gucci and Unilever Have in Common?

Unilever endured a turbulent time under Jope’s tenure, characterized by earnings disappointments, scattergun acquisitions and a year ago, the botched proposed £50 billion bid for GSK Plc’s consumer arm, now listed as Haleon Plc. If Schumacher doesn’t reverse the underperformance, calls for spinning off or selling the food business, which could be worth about 50 billion euros, will only grow louder.

Both Gucci and Unilever face being out of fashion — the former with shoppers, the latter with investors — if their left-field appointments don’t deliver.

While that could mean taking an ax to hemlines at Gucci, at Unilever, it’s the sprawling conglomerate structure that could ultimately pay the price.