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.

The French luxury-goods company named Demna Gvasalia as the new artistic director of its flagship label Gucci, as the group seeks a brand turnaround amid a challenging market backdrop for luxury names.