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Tag: Kering

  • Gucci’s Rebranding Challenge: Kering CEO Maps Out Strategy for Sophisticated Chinese Luxury Market

    Gucci’s Rebranding Challenge: Kering CEO Maps Out Strategy for Sophisticated Chinese Luxury Market

    Kering’s flagship brand, Gucci, is focusing on rebuilding its market position in China following years of stagnation. The luxury company’s complacency resulted in an underwhelming retail experience and poorly situated stores, according to Kering CEO Luca de Meo.

    China: A Changed Landscape

    China has been a significant growth driver for the global luxury sector, worth approximately US$400 billion, for over a decade. Gucci, like many of its competitors, capitalized on this expanding market. However, the brand failed to take advantage of a brief shopping surge following the pandemic and couldn’t recover when Chinese consumer spending slowed.

    De Meo, speaking at Kering’s first investor day since he assumed his role in September, expressed that Gucci needs to reevaluate its strategy in China. He emphasized the necessity to cater to the discerning clientele with high-quality retail experiences and to move away from relying on off-price outlets offering goods at discounted rates.

    “Gucci needs a comeback,” de Meo asserted, criticizing the brand’s previous approach to China as an easy revenue source.

    The Evolving Chinese Consumer

    The retail landscape in China has transformed significantly over the years. De Meo noted that Chinese consumers are now motivated by quality, design, and experience rather than logo-driven purchases, a trend seen in markets like Japan, South Korea, and Europe.

    The CEO stressed the importance of a consistent brand message and an enhanced in-store experience to revive growth in China. Kering also revealed plans to acquire a minority stake in the Shanghai-based Icicle Fashion Group.

    Learning from the Auto Industry

    De Meo, who previously served as CEO of Renault, drew parallels between the luxury sector and the auto industry. He warned luxury brands not to underestimate domestic competition and acknowledged China’s innovative capabilities.

    Other brands in Kering’s luxury portfolio, such as Bottega Veneta and Saint Laurent, have already begun reaping the benefits of a more finely-tuned China strategy. However, he indicated that Gucci’s recovery would be a more prolonged process.

    “For Gucci, the verdict is still out. This transformation won’t be instantaneous, but we anticipate seeing measurable progress within the next few months to a year,” he stated.

    Questions & Answers

    What is Kering’s plan for Gucci in China?
    Kering plans to reinvent Gucci in China by focusing on higher quality retail experiences and catering to discerning clientele. The company is moving away from off-price outlets and is focusing on a consistent brand message and enhanced in-store experience.

    How has consumer behavior changed in China’s luxury market?
    Chinese consumers are now motivated by quality, design, and experience rather than logo-driven purchases. This shift mirrors trends seen in other markets such as Japan, South Korea, and Europe.

    How long will Gucci’s recovery take according to Kering’s CEO?
    Kering’s CEO, Luca de Meo, anticipates that Gucci’s recovery in China will be a prolonged process, with measurable progress expected within the next few months to a year.

  • Kering Divests Beauty Division To L’oreal For $4.6b: A Strategic Push For Luxury Fashion Focus

    Kering Divests Beauty Division To L’oreal For $4.6b: A Strategic Push For Luxury Fashion Focus

    In a significant maneuver towards streamlining its operations, luxury conglomerate Kering has divested its beauty division to L’Oreal. The deal, valued at US$4.6 billion (EU$4 billion), is part of Kering’s broader strategy to concentrate on its essential fashion brands.

    Agreement Details

    Under the terms of the agreement, L’Oreal has gained 50-year exclusive rights to manufacture, develop, and circulate fragrances and cosmetics for renowned brands like Creed, Bottega Veneta, and Balenciaga. Furthermore, the deal encompasses the forthcoming acquisition of Gucci Beauty once its current license with Coty concludes.

    Kering’s CEO, Luca de Meo, views this partnership as a significant leap towards enhancing the expansion of its fragrance and cosmetics houses. De Meo expressed his optimism about the partnership, stating it would drive scale in the beauty sector and uncover extensive long-term potential for the brands.

    Strategic Coordination and Joint Ventures

    To ensure brand consistency, a strategic committee will be instituted to facilitate coordination between Kering’s brands and L’Oreal. The committee’s function will be to provide an alignment that reinforces the brands’ coherence across different categories.

    Additionally, both companies have plans to probe into potential business prospects through intended 50/50 joint ventures. These ventures are seen as opportunities to strengthen their brand portfolios and expand market reach.

    L’Oreal’s CEO, Nicolas Hieronimus, believes the partnership will assist in broadening the company’s reach into high-growth segments. Hieronimus is confident that this alliance will position them as leading contenders in the rapidly expanding niche fragrance market. He lauded Gucci, Bottega Veneta, and Balenciaga as exceptional couture brands possessing considerable potential.

    Deal Closure

    The agreement is anticipated to conclude in the first half of next year, with payment to be made in cash. The deal’s completion is still contingent on receiving regulatory approval.

    Questions & Answers

    What does this deal mean for Kering?
    This deal allows Kering to focus on its core luxury fashion houses, while also potentially enhancing the growth of its fragrance and cosmetics brands through a partnership with L’Oreal.

    How will L’Oreal benefit from this deal?
    L’Oreal will acquire exclusive rights to manufacture and distribute products for some of the world’s most prestigious brands, thus potentially expanding its influence in high-growth segments and the niche fragrance market.

    What are the future plans of both companies post this deal?
    Both companies plan to establish a strategic committee to ensure brand coherence. They also intend to explore possible business opportunities through equal stake joint ventures.

  • Kering Reports 16% Revenue Drop Amid Gucci’s Struggling Sales In First Half Of 2021

    Kering Reports 16% Revenue Drop Amid Gucci’s Struggling Sales In First Half Of 2021

    Kering, the renowned French luxury merchandise corporation, has disclosed a significant sales drop for the initial half of the year. The company’s performance continues to be impacted negatively owing to a consistent decline in sales from Gucci.

    Semi-Annual Performance Analysis

    During the six months ending on 30th June, the conglomerate experienced a 16% fall in revenue, descending to EUR 7.6 billion (equivalent to US$ 8.7 billion). This figure incorporates a 14% decrease in the first quarter and an 18% fall in the second.

    The primary contributor to this downward trend is Gucci, with a substantial 26% reduction in sales. Other luxury houses also saw drops in their performance, including Yves Saint Laurent with an 11% decrease, and other associated houses posting a 15% decline.

    However, it was not all gloomy for Kering. Bottega Veneta reported a 1% increase in sales, while the Kering Eyewear and Corporate segment, inclusive of Kering Beaute, witnessed a growth of 2%.

    Geographical Sales Trends

    Despite the overall downturn, Kering reported a minor upward trend in sales for Asia-Pacific and North America during the second quarter. In contrast, Western Europe and Japan saw an acceleration in their sales decline, largely attributed to a significant drop in tourism.

    Chairman and CEO Francois-Henri Pinault, while acknowledging the challenging market conditions, emphasized the company’s commitment to streamlining distribution and controlling costs. He pointed out the decisive steps taken to fortify the company’s financial structure.

    Financial Indicators

    In terms of net income attributed to the company, the figures stood at EUR 474 million, a significant decrease from the EUR 878 million reported in the same period the previous year.

    Despite the lower than expected numbers, Pinault expressed optimism for the company’s future. He believes that the strategic efforts undertaken by the company over the past two years have laid a robust foundation for the next phase of Kering’s growth and development.

    Questions & Answers

    What was Kering’s reported revenue for the first half of the year?
    Kering reported a revenue of EUR 7.6 billion (US$ 8.7 billion) for the first half of the year, representing a 16% decrease compared to the corresponding period last year.

    Which brands under Kering experienced a decline in sales?
    Gucci was the primary underperformer with a sales drop of 26%. Yves Saint Laurent and other associated brands also experienced declines in sales, with decreases of 11% and 15% respectively.

    What were the key contributing factors to the sales decline?
    The sales decline was primarily attributed to reduced tourism, impacting sales in Western Europe and Japan. Additionally, specific brands like Gucci significantly underperformed.

  • Alessandro Michele is stepping down as Gucci’s creative director

    Alessandro Michele is stepping down as Gucci’s creative director

    The company announced Wednesday that Alessandro Michele is stepping down as Gucci’s creative director. Michele, who has been with Gucci for 20 years, assumed the role in 2015. Before becoming creative director, he was in the company’s shoe and accessories department.

    “There are times when paths part ways because of the different perspectives each one of us may have,” Michele said in a statement released by Kering, the luxury goods brand that owns Gucci. “Today an extraordinary journey ends for me, lasting more than twenty years, within a company to which I have tirelessly dedicated all my love and creative passion.”

    Michele brought a genderfluid and maximalist aesthetic to the brand, which was a departure from Tom Ford’s sleek and provocative rebranding which saved the company in the 1990s.

    Kering wrote that Michele “has played a fundamental part in making the brand what it is today through his groundbreaking creativity, while staying true to the renowned codes of the House.”

    Dakota Johnson, Harry Styles and Lana Del Ray all led Gucci campaigns, which saw accelerated sales when Michele was in charge. Gucci’s revenue rose from just under €4 billion ($4.1 billion) in 2015 to €9.7 billion ($10 billion) in 2021. However, its success took a hit due to the pandemic, and now Gucci is looking to revamp.

    Michele described the people behind Gucci as his adopted family and thanked them in his statement. He left them with a wish: to continue to cultivate their dreams, “the subtle and intangible matter that makes life worth living.”

    “May you continue to nourish yourselves with poetic and inclusive imagery, remaining faithful to your values,” he said. “May you always live by your passions, propelled by the wind of freedom.”

    A new creative director has not yet been announced.

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  • Kering Eyewear opens first South Korea store, its largest yet in Asia

    Kering Eyewear opens first South Korea store, its largest yet in Asia

    Luxury brand Kering Eyewear has launched its first store in South Korea, located on the eighth floor of Lotte Duty Free’s store in Busan.

    A collaboration between Kering Group and Lotte, the brand claims the new boutique is its largest store in Asia to date.

    Center stage in the store is a giant media wall showcasing new products. A virtual fitting service for Kering eyewear is provided by Lotte Internet Duty Free using augmented reality (AR) technology. Lotte Internet Duty Free plans to implement a virtual reality (VR) tool allowing customers to view the boutique in 360 degrees without physically visiting the store.

    Kering Group wants to expand its presence in Asia and deepen its commitment to sustainability. The group has also revealed plans to strengthen its Gucci brand’s presence in China, where it aims to become the market leader by 2025.

    Kering wants to cut its carbon footprint by 40 per cent by 2025. It also emphasizes its efforts in sustainable sourcing, buying 30 per cent of organic cotton, 100 per cent of gold, and 73 per cent of sustainable leather from suppliers who source their materials ethically.

    Last March, Kering Eyewear bought luxury eyewear company Maui Jim as part of its expansion strategy.

  • Kering bullish on Chinese domestic luxury consumption

    Kering bullish on Chinese domestic luxury consumption

    French luxury goods Kering sounded a positive note on its forecasts for its performance this year in China, even if the country’s consumers are not expected to resume traveling abroad for at least a year.

    Group managing director Jean-Francois Palus told analysts on Thursday the company had deepened its presence in mainland China during the pandemic, notably through e-commerce on Alibaba’s Tmall platform as well as its own websites in the country.

    He also cited internal tourist flows to the duty-free shopping hub of Hainan as well as other parts of the country as fuelling luxury sales growth.

    The executive said he was optimistic about the health of Chinese consumption, noting a lot of new consumers beginning to buy luxury products, with “a good propensity to buy and to buy more.”

  • Prada sees second-hand fashion as opportunity, weighs partnerships

    Prada sees second-hand fashion as opportunity, weighs partnerships

    Italian fashion group Prada sees opportunity in the booming second-hand fashion sector which it can develop both in-house and through partnerships, marketing chief and heir designate Lorenzo Bertelli said.

    The market for pre-owned chic bags and clothes has surged over the last three years, driven by younger, more environmentally conscious shoppers looking for affordable high-end goods.

    It is expected to reach 33 billion euros ($37.2 billion) in size this year after growing by 65% between 2017 and 2021, according to consultancy Bain. This compares with 12% growth for brand new luxury goods.

    Some rival luxury companies are already exploring the sector. Earlier this year, French conglomerate Kering took a 5% stake in Vestiaire Collective, a leading platform for second-hand clothes and handbags. Kering’s star brand Gucci also formed a partnership with U.S.-based resale platform The RealReal last year.

    “Second hand is a strategy we have been investigating for more than a year,” Lorenzo Bertelli, the eldest son of co-Chief Executives Patrizio Bertelli and Miuccia Prada, and the future brand leader, said in an interview.

    “I cannot disclose too much but for sure second-hand is there. We will take it as an opportunity.

    “It can be a partnership with a player or it can be something more in-house, or both of them, a sort of hybrid solution like for e-commerce,” he said.

    The heir to Prada’s empire, who said he wants to keep the family-controlled group independent when he takes the reins in a few years, doesn’t seem fazed by the future challenges of the ever-changing luxury sector.

    “Rallying and sport, in general, taught me a lot. (It) teaches you to never give up and also a lot of humility, in the sense that you have to learn,” he said. “Sometimes sport is cruel when you want to measure yourself.”

  • Kering invests in resale platform Vestiaire Collective

    Kering invests in resale platform Vestiaire Collective

    French luxury group Kering has taken a 5 percent stake in Vestiaire Collective, a leading platform for second-hand clothes and handbags, betting that the booming resale market will help it woo younger and more environmentally conscious shoppers.

    The purchase is part of a 178 million euro (US$215 million) financing round announced on Monday which valued Vestiaire Collective at more than US$1 billion, the companies said.

    U.S. investment firm Tiger Global Management also invested in the platform, while existing shareholders including Vogue publisher Conde Nast and French private equity firm Eurazeo put more money in.

    The pre-owned fashion market has enjoyed rapid growth over the last three years, with a further acceleration during the coronavirus pandemic, thanks to younger shoppers’ heightened focus on sustainability and also homebound consumers looking for good deals on second-hand clothes.

    “There is a real shift happening that is going to shape the future of the fashion industry, and as a leader, in the sector, we want to shape that trend,” Kering’s digital chief Gregory Boutte told reporters.

    The proportion of secondhand pieces in closets is predicted to grow from 21% in 2021 to 27% in 2023, with the value of the sector estimated to be worth over $60 billion by 2025, the companies said in a statement. Paris-based Vestiaire Collective said its transaction volume doubled in 2020.

    Luxury groups have traditionally been wary of secondhand sellers, which weaken their control over the distribution and pricing of their brands and, according to critics, can help spread counterfeit goods. But that is changing, and Kering’s star brand Gucci last year announced a partnership with U.S.-based resale platform The RealReal.

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  • Gucci powers French Luxury Group Kering’ growth

    Gucci powers French Luxury Group Kering’ growth

    French international luxury group Kering has seen positive trading results brought on by stronger-than-expected sales of its Gucci brand.

    The group is among several luxury houses that have so far managed to ride out interruptions to business caused by 21 weeks of protests in Hong Kong.

    Kering is following a strategy of redistributing stock originally intended for sale in Hong Kong to other markets.

    Gucci has a large store network in Mainland China and South Korea, where spending has picked up among luxury-goods consumers who may otherwise have shopped in Hong Kong. Sales in the territory during China’s Golden Week holiday were underwhelming.

    “The trends are still negative so far in Hong Kong,

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  • Kering faces €1.4 billion Italian tax bill

    Kering faces €1.4 billion Italian tax bill

    Kering is facing an Italian claim for €1.4 billion (£1.2 billion) in unpaid taxes. The company’s Swiss-based Luxury Goods International (LGI) subsidiary has been under investigation for allegedly avoiding tax on earnings generated elsewhere. The probe has largely centred on Gucci, Kering’s star brand and biggest revenue driver. Italy’s tax police carried out checks at Gucci’s Florence headquarters and Milan offices in 2017, and drew up the report that has now been handed to Kering, a source close to the investigation said.

    Kering has consistently denied avoiding tax, saying its activities were fully compliant with all tax obligations.

    In its statement on Friday, the group said the Italian tax authorities’ findings for the years 2011-2017 had yet to be finalised by their own enforcement team.

    “Kering challenges the outcome of the audit report both on the grounds and the amount,” the company said, adding that it “does not have the necessary information” to record a provision against any potential bill for back taxes or penalties.

    The company has said that LGI is a substantial firm in its own right, with 600 employees handling inventory, billing and supply-chain logistics, with a business model “known to French and other competent tax authorities”.

    According to reports by France’s Mediapart newspaper and Germany’s Der Spiegel, Kering’s wholesale activities – the sale of products to retailers such as department stores – have come under particular scrutiny.

    Some business carried out by Kering employees in locations including Milan and Paris was billed through the Swiss unit, incurring lower tax rates, according to those reports.

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  • Balenciaga launches first in-house eyewear line with Dover Street Market

    Balenciaga launches first in-house eyewear line with Dover Street Market

    French luxury house Kering has launched its first in-house Balenciaga eyewear line at British Dover Street Market stores. The new collection is exclusive to the DSM chain in the US, UK, Japan, Singapore and China, as well as the brand’s e-commerce channel. The high-end products are valued between US$290–570, with both sunglasses and prescription frames available.

    The Balenciaga eyewear line represents the first in-house Kering Eyewear product range. Previous Balenciaga collections were produced under Marcolin Eyewear, the creator of shades for numerous luxury labels.

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  • Kering leads the way to gender diversity

    Kering leads the way to gender diversity

    French luxury goods giant Kering has received a prize for its high level of female representation on its board. The company has made gender equality one of its corporate priority and has, this week, been chosen to receive the “Most Feminine Board of Directors” award.

    Handed out by the European Women on Boards along with Ethics & Boards, Kering was selected among the 200 largest companies of the Stoxx Europe 600 index based on the percentage of women on the boards as well as the presence of women serving as chief executive officer or chair of the executive board.

    The company, which owns a range of high-end labels including Saint Laurent, Bottega Veneta and Pomellato, launched a leadership and diversity program in 2010 with the aim of increasing access for women to leadership positions.

    Kering has also committed to reaching gender parity and pay equality at all levels by 2025.

    French companies are leading the way on gender diversity and Kering is a great model setting an example for the rest of the world to follow.

    Indeed, more than half of the group’s managers are women while they constitute 64% percent of the board and 33% of its executive committee.

    François-Henri Pinault, Kering’s CEO, also announced that the company would be doubling the budget of the Kering Foundation, aimed at tackling violence against women.

    Kering is also partnering with Michelle Obama for the French leg of her blockbuster tour for her memoir titled “Becoming.”

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  • Gucci fine jewelry new style revealed

    Gucci fine jewelry new style revealed

    These are flush times for Gucci, the 96-year-old house that in recent years has become fashion’s all-conquering luxury brand. And amid booming sales, Alessandro Michele, Gucci’s creative director since 2015, has introduced the brand’s first high-end fine jewelry line, a series of extravagant styles that present the designer’s florid evocations of flea market finds as gem-encrusted treasures.

    Talking of the nostalgic inspiration behind many of his creations, Mr. Michele said, “I’ve dressed a number of women in things that were gathering dust in vintage archives — they no longer existed.”

    “That includes jewelry as well,” he added. “It’s beautiful to bring them back to life and give them importance once again.”

    At the Gucci Hub, a former aeronautical factory here where the brand opened its headquarters last year, the jewelry showroom reflects Mr. Michele’s opulent touch: red velvet-covered walls, red velvet room dividers, red velvet-topped tooled wood tables around a densely floral Oriental rug, and bright-toned velvet coffers lined in silk to showcase the designer’s well-established motifs rendered as precious jewels.

    Tigers, snakes, lions and foxes form necklaces, bracelets and rings, mirroring earlier versions that Mr. Michele created for both the costume and the mid-market fine jewelry lines at Gucci. But the new higher-end collection — which has no specific name — is more elaborate, its 25 design styles accented with a range of gemstones.

    The new line appears to expand the reach of Mr. Michele’s remarkably successful universe for his most ardent and wealthy collectors. It’s Gucci style for Cartier spenders — at a time when Gucci has pledged to go fur-free, eliminating what had been the brand’s biggest-ticket items.

    Mr. Michele, who calls himself “a passionate student of antique jewelry,” has resurrected animalier styles, like those of the midcentury American jewelry designer David Webb, and for this new collection he has employed some vintage techniques like the intricate hand engraving used to create the animals’ faces, skipping the rhodium plating now common on white gold so it retains a yellowish cast, and the use of old-fashioned raised settings for the tiny diamonds spangled across the fishtail of a ring.

    “When you see the way I combine things with each other, you perceive everything together as a new language,” he said, referring to his fashion aesthetic that mashes up the animal motifs with Chinese silks and Mexican embroideries, Renaissance gowns, Victoriana, disco drama, high ’80s glam, shades of Elton John and Dapper Dan, and more. “There’s a complete fusion of ideas. This ‘disruption’ that everyone’s talking about is found in the dialogue between these elements.”

    From the new collection, Marco Bizzarri, the chief executive of Gucci, wears a woven gold bracelet with black diamonds that is embossed with the phrase “Blind for Love” in capital letters across the top.

    Mr. Michele himself has a gold ring with a fox’s head, a large brown diamond set between its ears.

    Though the pieces look like styles that, in their antique forms, were made for women, in the Gucci context, anyone can wear them.

    “Clothes, like jewelry, don’t have very revolutionary roots, meaning that what’s revolutionary is the way you wear a piece of jewelry,” the designer said.

    So far the collection, with prices that mostly range from 15,000 euros to 70,000 euros (US$17,900 to US$83,500), has been offered only to favorite clients through private sales in Japan, China and the United States and private appointments that began in July.

    Gucci refers to the pieces, which are not high jewelry (typically starting in the $100,000 range and going into the millions), as “medium-high,” or as “unique pieces” when it repeats designs using different gems.

    However, the brand says it is considering a move into the bigger stones and larger price tags of true high jewelry for its next collection.

    Gucci is not the first fashion house to enter the upper echelons of jewelry.

    Chanel, Dior and Louis Vuitton have all made it big business, as the high jewelry market has flourished through and beyond the economic downturn of the last decade.

    And the brand’s fortunes have been growing at a clip that has shocked industry watchers.

    Kering, its parent group, reported that Gucci’s revenue soared 42 percent to €1.5 billion in the three months to the end of September. And its biggest boost has been coming from millennials, who, Kering says, account for at least half of its 2017 sales thus far.

    “The new generation is going to want a more modern jeweler,” said Maurizio Pisanu, the house’s director of jewelry merchandising. “So it’s up to the brand that realizes that first, and Gucci already had the right intuition two years ago — to break the rules.”

    Gucci has hired its first staff gemologist to search for stones worldwide and maintains a jewelry workshop with about 30 goldsmiths and stone-setters near Milan.

    All of the brand’s existing fine jewelry and now most of its high-end fine jewelry pieces are made there, with some help from an external atelier in Valenza, a center of Italian jewelry fabrication about 60 miles to the south.

    According to the brand, sales of the initial pieces have been brisk (although it won’t provide specifics).

    So if the collection does expand, Mr. Michele’s antique-tinged, everything-is-precious aesthetic might disrupt the higher stratospheres of the jewelry sector in the way that he has already reset Gucci and the fashion desires of a vast public.

    The collection has arrived at a moment when the codes of high jewelry are in flux — important stones are becoming more difficult to find, and a new generation of customers is more interested in showing off wearable (and possibly recognizably branded) design than owning the special occasion gem-encrusted parures of the past.

    Mr. Pisanu said design-driven jewelry customers “benefit a brand like Gucci, where jewelry isn’t our core business but we have the ability to make high-quality jewelry like the other brands — and with a different aesthetic that’s much more innovative than what a classic brand would ever dare to make.”

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  • Kering’s new digital strategy revealed

    Kering’s new digital strategy revealed

    Customers draw inspiration from today’s hyperconnected world and they engage with luxury brands through the digital tools they use every day. In a fast-changing environment, the success of luxury houses depends upon their ability to offer creative propositions, and a consistent customer experience across all distribution channels and devices.

    In December 2017, Kering appointed Grégory Boutté as Chief Client and Digital Officer with the mission to carry out Kering’s digital transformation and to take the lead on e-commerce, CRM, data science and innovation for the Group. Since then, e-commerce has been the fastest growing channel for all Kering’s brands and represents 6% of the Group’s total retail sales for the first half of 2018.

    “Digital can be many different things at once – a distribution channel; a platform for offering seamless omni-channel services to clients; a driver of brand image and visibility; and a tool for engaging with customers in a personalized way. Digital technology, data science and innovation provide a way of offering our customers the best possible experience – on every touchpoint”, declared Grégory Boutté.

    Drawing upon his vision, Kering’s digital approach is based on the following objectives:

    • to provide the Group and its Houses with a real-time 360-degree view of their customers, and to deliver rich and personalized experiences;
    • to offer clients high levels of service, from initial transaction to after-sales;
    • to enable Kering’s Houses to develop close relationships with their clients and to adapt their offerings in order to meet specific needs.

    Today, Kering is announcing new milestones on its digital journey.

    The following initiatives will strengthen Kering’s focus on enhancing the Group’s omni-channel capabilities and further developing its Houses’ digital activities.

    In-store customer experience

    Kering is working on a suite of apps in partnership with Apple to be used by Houses staff in store, the first of which is a store experience app that enables sales associates in-store to access stock levels in real time to provide their customers with a fully personalized service.

    Via the app, sales associates know instantly if a specific size or color is available in-store or if it can be ordered from other stores; they can also give customized styling recommendations.

    Client service

    Kering developed a new approach to customer service with centralized teams in Europe and the US focused on addressing customers’ requests.

    Gucci, Saint Laurent and Bottega Veneta have dedicated teams, while other brands grouped their efforts under a single customer service unit, operated by Kering on their behalf.

    CRM and Communication

    Kering has launched several pilot projects using data science techniques to deliver personalized messages and experiences to customers, based on their profile and purchasing history.

    All Kering Houses have launched or are launching WeChat mini-programs in order to build as close a relationship as possible with their Chinese customers and to offer social commerce.

    E-commerce 

    Kering will leverage its in-house technology and operations team to fully internalize the e-commerce activities currently handled through the joint venture with YNAP.

    Following a highly successful and fruitful seven-year partnership with YNAP, these e-commerce activities will transition to Kering in the first half of 2020.

    Coordinated efforts and shared expertise with YNAP have enabled Kering Houses to enhance the level of service of their e-commerce websites. Most of them now offer services such as check availability, reserve in store, make store appointment, pick-up in store, return in store, exchange in store, and buy online in store.

    Kering will continue to develop partnerships with third-party e-commerce platforms when relevant.

    Digital capabilities

    A data science team has been created at Group level to improve the service provided to the clients of Kering’s Houses by making the best use of the available data.

    A China-based Client & Digital team is currently being formed. It will be responsible for adapting digital practices to the Chinese market, along with identifying and promoting innovations from China to other markets.

    Kering’s Group Innovation team has been tasked with two missions: to instill an internal culture of innovation (test-and-learn approach, quick sharing of discoveries, scouting business trends), and to work on disruptive technologies to further improve the client experience in the future in terms of business or environmental matters.

    Kering’s Chief Client & Digital Officer Grégory Boutté added: “These exciting new initiatives have been designed to meet – and exceed – the needs of our Houses’ customers and to ensure we continue to offer them an exceptional experience across all channels in a fast-changing global market. These opportunities have been made possible by the experience and know-how that Kering has gained over the years, notably through its successful joint venture with YNAP. We will continue to work with them post-transition and to enjoy a fruitful relationship.”

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  • Why is Kering buying its shares back?

    Why is Kering buying its shares back?

    Kering, which owns Gucci, Saint Laurent and Balenciaga, said it planned to buy back up to 1 percent of its share capital over a 12-month period. According to the luxury-goods group, the total amount of the share buyback agreement would not exceed €300 million (about $342 million) and the price would not exceed €480 per share.

    A stock buyback, also known as a share repurchase, occurs when a company buys back its shares from the marketplace. This means that by paying shareholders the market value per share, a company like Kering can reabsorb a portion of its ownership that was previously distributed among public and private investors.

    But what are the reasons for this?

    Each share represents a small stake in the ownership of the company. There can be several reasons for a share buyback, such as preserving stock price, but in Kering’s case, the move suggests that the company’s senior management is confident about the business and believes its shares are undervalued.

    Undervaluation can occur for multiple reasons. Kering’s management may believe the business is undervalued due to investors’ jittery sentiment around the China market and their ability to see potential in the company’s long term performance.

    Shares in Kering hit a record high of around €522 in June, but dipped in the past three months over worries that white-hot megabrand Gucci was running out of steam.

    The stock rose again in late October after the group reported a better-than-expected rise in third-quarter revenue.

    Sales growth for the conglomerate had been expected to slow from 31.5 percent a quarter earlier to the 22.5 percent rise forecast in a poll of analysts by Inquiry Financial.

    But Gucci sales proved stronger than expected.

    Buying back shares is also a common way for companies sitting on big cash piles to do something about it, and the ideal time is usually after a drop in the stock price.

    It wasn’t Kering’s stocks alone that fell earlier this month.

    Shares in European luxury-goods companies including French rival LVMH sunk, with analysts citing concerns over a consumer slowdown in China, its single biggest market.

    Part of this is due to a crackdown by customs officials, which limits the amount individual Chinese travellers can bring back from abroad.

    “In the most recent weeks, Kering has suffered more than its fair share of pain on the back of the luxury sector downward adjustment following concerns on Chinese consumer confidence,” said Luca Solca, head of luxury goods at BNP Exane Paribas.

    “This has come as investors wanting to reduce exposure to the sector have chosen to lock in gains in stocks that had performed the most, like Kering.”

    Since Chinese consumers account for 32 percent of the worldwide total of luxury sales and about one third of them shop overseas, this is a worry for brands.

    In addition, there is the continued issue of daigou (grey market shopping agents) and the fact that China’s economy is growing at its slowest pace since the financial crisis.

    Gucci president and chief executive Marco Bizzarri acknowledged these challenges.

    “I control what I can control,” he said.

    “Currency fluctuations, traffic flows, daigou duties. It is something we cannot control as a company, so as a CEO I need to control what I can. I hope that Chinese customers are now going to spend more in China, so we’ll do our best to increase their shopping experience here.”

    Jean-Marc Duplaix, Kering’s financial director, said during Kering’s third-quarter earnings call, which came after luxury stocks fell, that the company was seeing an improvement in the retention of Chinese millennial customers and demand had not dipped.

    “In terms of spending power, the situation is still quite sound in China,” he said. “All the events especially in China we had in September or in October, we saw quite good figures. I think that underlying trends are still very, very, very solid.”

    Earlier this year, Bizzarri said that Gucci’s eventual target is to achieve €10 billion ($11.6 billion) in annual revenue.

    “We don’t expect short-term growth issues at Gucci, and anticipate more positive surprises on operating leverage,” said Solca.

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