Gucci ousts leadership duo after sales decline

* Gucci CEO and creative director step down

* Luxury goods head Bizzarri to become new Gucci CEO (Recasts with analyst comment, background, shares)

By Astrid Wendlandt

PARIS, Dec (Shanghai: 600875.SS - news) 12 (Reuters) - The owners of Gucci parted company with the Italian fashion brand's leadership duo on Friday, promoting the head of their luxury goods business to the top job in response to slumping sales.

Gucci, which provides the bulk of operating income for parent company Kering (Milan: KER.MI - news) , had long said that declining sales were a result of trying to move the brand further upmarket and tough trading, particularly in China.

Deciding it was now time for a change at the top, Kering promoted luxury couture and leather goods division head Marco Bizzarri to become Gucci chief executive from Jan. 1. He replaces Patrizio di Marco, who has led the brand for almost six years.

Gucci Creative Director Frida Giannini will leave her post at the end of February after eight years, with a replacement for that key post to be appointed later. Di Marco and Giannini are a couple who have a daughter.

Bizzarri, an Italian who joined Kering in 2005 as head of the Stella McCartney business, is credited with building Bottega Veneta -- known for its intrecciato leather weaving technique -- into one of the industry's strongest and most profitable brands.

Today it is Kering's second-largest contributor of sales and profit. Kering also controls sportswear brand Puma and luxury label Saint Laurent.

"Marco Bizzarri will support Gucci's brand elevation strategy... and develop the iconic Florentine house throughout the changing world of luxury," Kering said.

Kering Chairman and CEO Francois-Henri Pinault will take interim charge of the luxury couture and leather goods division until a new executive is appointed.

AIMING TOO HIGH

Analysts and investors had found Gucci got rid of too many of its more easily affordable items and raised prices too high.

"Gucci will benefit from new ideas and fresh energy. The key to staying relevant in luxury goods is continuing reinvention," Exane BNP Paribas luxury goods analyst Luca Solca said.

Kering shares slipped 1.7 percent by 1200 GMT, broadly in line with the line with CAC 40 index.

Based on sales performance, some analysts argued rivals such as Burberry and Louis Vuitton, part of LVMH, had done a better job at rebuilding and supporting an exclusive image.

Gucci sales fell 3.5 percent in the first nine months of the year to 2.53 billion euros ($3.15 billion), while revenue growth at rivals Burberry and Hermes remained above 10 percent during that period.

Every major luxury goods maker has been hit by the worst spending slump in five years as concerns about economic growth and conflicts in the Middle East and Ukraine curbed demand from the Chinese, Russians and Europeans.

Big labels have also been suffering from brand fatigue as consumers increasingly favour smaller, more niche names which have more limited distribution. ($1 = 0.8041 euros)