Kering SA appointed Balenciaga designer Demna Gvasalia to oversee a makeover of its struggling Gucci fashion label, disappointing investors who had expected a high-profile external hire.

Kering lost around $3 billion in stockmarket value on Friday after the group chose in-house talent Demna to reinvigorate its Gucci label rather than hiring one of fashion's big-ticket names as chief designer.

Gucci has announced that the Balenciaga artistic director Demna, who goes by one name, will take over the creative direction of the Italian luxury fashion house starting in July.