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Tag: Kering

  • European Luxury Groups Shed €250 Billion as China Demand Slumps

    European Luxury Groups Shed €250 Billion as China Demand Slumps

    European luxury groups shed approximately €250 billion in market value this year as spending across mainland China slowed sharply. The decline forced earnings misses at LVMH, Kering and Hermes after a prolonged property downturn and financial market weakness eroded high-end consumption.

    Europe’s six largest listed luxury houses, including Richemont, Prada and Moncler, absorbed combined market capitalisation losses of €251 billion. LVMH lost €131.6 billion in value, while Hermes surrendered €93.3 billion as Chinese retail sales growth averaged under 0.5 per cent monthly over the past six months.

    Contracting Sales Across Major Houses

    Third-quarter disclosures pointed to widespread deterioration in client demand. Sales at LVMH’s fashion and leather goods division dropped by a mid-teens percentage among Chinese shoppers worldwide.

    Kering experienced an even sharper contraction. Group revenue from Chinese consumers fell between 15 and 20 per cent during the third quarter, worsening from the mid-teens decline recorded in the previous three months.

    Hermes recorded a 2 per cent decline in global ready-to-wear and accessories revenue. The house faced headwinds from falling equity prices in China alongside tighter regulatory scrutiny on overseas capital.

    Tax Pressures and Market Contraction

    Chinese authorities enacted a 20 per cent tax targeting dividends and interest income generated from offshore trusts. The policy took effect this week, adding fiscal pressure on affluent domestic shoppers who drive personal luxury sales.

    Financial markets offered no buffer. The CSI 300 index dropped 19 per cent over four months, erasing more than US$2 trillion in value as investors pulled back over domestic consumption trends and technology equity volatility.

    Broader consumer sentiment weakened alongside personal balance sheets, as the property slump and falling stock markets undermined domestic demand.

    Divergence in Luxury Resilience

    The downturn did not cut evenly across every luxury brand. Hermes expanded sales of Birkin bags and top-tier leather goods by 10.8 per cent globally, sustained by ultra-wealthy buyers.

    Fine jewellery also held up. LVMH’s Tiffany and Kering’s Boucheron produced double-digit percentage revenue increases during the quarter, outperforming ready-to-wear lines and standard footwear.

    Labels reliant on aspirational middle-class shoppers absorbed the heaviest hits. Kering struggled directly as shoppers postponed entry-level purchases, whereas houses anchored strictly to ultra-high-net-worth allocations preserved margin stability.

    Pressures Spread Beyond Asian Borders

    American spending failed to offset the drag from mainland China. Citi credit card transaction figures showed luxury purchasing falls of at least 4 per cent across July, August and September.

    Rising fuel costs and cooling stock performance curtailed discretionary outlays in the United States. Kering confirmed mounting strain on American household expenditure heading into the November elections.

    For luxury operators in Asia, capital allocations will shift from aggressive footprint expansion toward cost controls and productivity gains per square metre.

  • LVMH, Hermès and Kering Shares Fall up to 40% Since January

    LVMH, Hermès and Kering Shares Fall up to 40% Since January

    Over the past three years, the luxury retail sector has experienced a steady decline following a brief post-pandemic boom, with most major players reporting lower-than-ever sales figures.

    Since January, share prices of LVMH, Hermès and Kering have fallen 40 per cent, 39 per cent and 30 per cent, respectively, while Richemont remains roughly flat.

    Valuations tumble after pandemic highs

    The downturn reflects the Q3 performance of eight key luxury companies, including Burberry, Hermès, Kering, LVMH, Moncler, Prada and Richemont, as major luxury houses struggle with falling demand.

    Third-quarter earnings across eight key players, Burberry, Hermès, Kering, LVMH, Moncler, Prada and Richemont, show softer client appetite. Entry-level and aspirational buyers cut spending sharply. Top-tier jewelry and watch assets held their ground better than leather goods and fashion apparel.

    Richemont holds steady against fashion losses

    Richemont avoided the valuation collapse that hit French fashion and leather houses. Its share price traded roughly unchanged over the period. Steady demand for high jewelry and fine timepieces insulated the group.

    By contrast, fashion-heavy houses such as Kering and LVMH bore the brunt of reduced store traffic. Aspirational buyers drove volume growth for designer accessories and entry-level items during the post-pandemic rebound. They cut discretionary outlays as price hikes collided with tighter household budgets.

    Shift in aspirational demand across core markets

    Retail strategies face a reset after three years of contraction. Luxury groups spent the post-pandemic cycle raising prices on signature handbags and footwear. They wagered that brand equity would protect volume.

    That pricing strategy has hit resistance. Brands dependent on repeat purchases from middle-income aspirational consumers are seeing foot traffic slow. Operators and department store landlords must now adjust inventory intake and floor space allocations.

    Earnings filings show divided sector performance

    The retreat began three years ago when pandemic savings cushions unwound and international travel normalized. Quarterly reports from Paris and Milan have since shown sequential decelerations across core product divisions.

    Investors and retail operators now track upcoming full-year earnings from LVMH, Kering and Richemont. Those reports will show whether inventory adjustments and selective price freezes can stabilize revenue heading into the next fiscal cycle.

  • China’s 20% Tax Crackdown Piles Pressure on Luxury Brands

    China’s 20% Tax Crackdown Piles Pressure on Luxury Brands

    China’s 20 per cent tax crackdown on wealthy individuals has become the latest headache for luxury brands ahead of third-quarter financial results. Under Beijing’s new rules, affluent citizens who used offshore trusts to shelter assets have until October 22 to declare and pay years of back taxes, threatening spending in a market that generates roughly a fifth of global luxury purchases.

    Shares in LVMH and Birkin bag maker Hermes are both down about 40 per cent this year near multi-year lows, while Gucci owner Kering has fallen 29 per cent. Summer shopping mall data in mainland China pointed to a sharp deceleration in growth, according to Bernstein analysts.

    Tax Deadlines and Retail Liquidity

    The 20 per cent levy is hitting spending by ultra-high-net-worth individuals, a tier that had previously proved more resilient than middle-class consumers affected by China’s prolonged property downturn. Alexis Bonhomme, head of Shanghai-based luxury consultancy Trinity Asia, noted that some shoppers face short-term liquidity constraints before the compliance window closes.

    “Until the deadline to pay the tax, some people may face liquidity issues”, Bonhomme said. “This doesn’t mean they won’t start buying again, but right now, the mood just isn’t there,” he added.

    Quiet Luxury Pulls Ahead in Mall Aisles

    Two industry sources familiar with third-quarter mall trading in mainland China said overall conditions remained weak, although performance varied widely between brands. Smaller “quiet luxury” labels such as cashmere specialist Brunello Cucinelli and LVMH’s Loro Piana are outperforming more conspicuous brands such as Louis Vuitton and Gucci.

    High-end jewellery remains a bright spot. Brands such as Richemont’s Cartier have benefited as wealthy consumers increasingly favour gold and precious materials, which are viewed as offering more enduring value.

    Global Headwinds Compound Asia Weakness

    The slowdown in China comes as luxury demand softens in the United States, the industry’s largest market. US credit card spending on luxury goods tracked by Citi fell for a third consecutive month in September as consumer confidence weakened ahead of midterm elections.

    Luxury houses are also grappling with fallout from the Iran war. Kering has already warned analysts to expect a further contraction at Gucci, prompting brokerages to cut their stock price targets.

    Earlier Strains and Upcoming Earnings

    The $350 billion luxury sector remains mired in a three-year slowdown after pandemic-era demand weakened. In downtown Beijing, Deng Qi, an exporter of ceramic building components, forecast 20 per cent less luxury spending than in previous years, warning that the offshore tax measures undermine confidence across the broader wealthy demographic.

    Investors will receive their first read on the sector when LVMH reports results on Monday, with analysts forecasting quarterly sales of €18.5 billion ($20.7 billion), up 1 per cent from a year earlier. Kering and Hermes report their quarterly performance on October 22.

  • Global Luxury Set to Grow 2 to 5 Percent as Burberry and Kering Reset

    Global Luxury Set to Grow 2 to 5 Percent as Burberry and Kering Reset

    Global luxury spending is set to grow between 2 percent and 5 percent this year following a three-year malaise, according to Boston Consulting Group data presented at an executive roundtable last Thursday.

    The projected rebound is driven by an 8 percent increase in North America and a 2 percent to 3 percent recovery in China, while Middle East sales are expected to drop by double digits.

    Executives from Burberry and Kering told the gathering that brands are overhauling strategies and price points, as a BCG survey of 12,000 luxury shoppers revealed that 70 percent have avoided purchases due to price increases.

    Shifting Price Points and Product Lines

    Burberry is running a turnaround plan called Burberry Forward, focused on brand identity, client engagement, core merchandise, and store distribution. Laura Dubin-Wander, Americas president for the brand, said it is refocusing on heritage outerwear and accessible entry products. To draw new shoppers, the house set up dedicated trench coat areas, scarf bars, and displays for $400 polo shirts.

    Its store network is also under review. The company plans to downsize or exit unproductive sites while adding pop-ups in affluent resort towns and growing its womenswear athleisure range. On the marketing side, it added American athletes like Carmelo Anthony to build wider recognition.

    Across Asia-Pacific, landlords and department stores must rebalance their floor space. Retailers that gave prime ground-floor square footage to high-priced ready-to-wear collections now see lower sales densities. Operators in hubs like Shanghai, Tokyo, and Singapore are shifting space toward beauty counters, eyewear concessions, and fragrance boutiques where sales volumes hold up.

    Brand margins are shifting as sales move from runway lines to entry-level accessories. Labels must sell far more low-ticket units to offset slowing ready-to-wear purchases. That puts direct pressure on boutique staffing and stock management.

    Price Sensitivity Bites Top Spenders

    Affordability concerns now reach well beyond entry-level shoppers, according to an annual survey of 12,000 luxury consumers by BCG and Altagamma. Roughly 70 percent of respondents walked away from a planned purchase at least once due to a price increase. Most redirected that money into luxury cosmetics and skincare.

    Kering is splitting its commercial strategy to handle this divide between wealthy clients and aspirational buyers. Ewa Abrams, Americas president at Kering, said top-tier clients expect private, personalized service. Aspirational shoppers, by contrast, respond to cultural partnerships in entry categories such as eyewear and fragrances.

    It’s important to stimulate them with the right product categories such as eyewear or fragrance.

    Channel Synergies and Technology Steps

    A shared operational platform now runs across the French group’s houses, including Gucci, Saint Laurent, Balenciaga, and Bottega Veneta. The setup streamlines administration. It also uses artificial intelligence to accelerate commercial decisions.

    Social commerce is another testing ground. Tim Chai, head of product strategy at TikTok Shop, said digital luxury consumers favor unpolished, direct brand communication over rigid corporate campaigns. Burberry adopted fast-paced video clips to show British heritage to younger online shoppers.

    Customer discovery is increasingly driven by artificial intelligence. The BCG survey found 90 percent of luxury shoppers use AI tools daily or weekly to find products, compare prices, and get recommendations. Those shoppers also trust AI comparison tools more than traditional social media influencers.

    Regional Exposure and China Trajectory

    Recent restructuring follows a painful financial stretch across the European luxury sector. London-listed Burberry posted full-year revenue of $2.42 billion and net income of $21 million, leaving an operating margin of 0.87 percent. Paris-based Kering generated trailing twelve-month revenue of 14.46 billion euros and recorded a net loss of 322 million euros as demand slowed in key Asian shopping cities.

    Investors will get their next check on November 12, 2026, when Burberry reports interim results. Those numbers will show whether lower price points and store cuts can stop margin erosion.

  • Gucci Shifts Sneaker Manufacturing to China in Break with Tradition

    Gucci Shifts Sneaker Manufacturing to China in Break with Tradition

    Gucci has begun manufacturing new sneaker models in China this season, departing from its longstanding practice of producing all footwear within Italy.

    The move by parent group Kering marks the first time the luxury house has placed assembly of select athletic footwear lines directly into Chinese manufacturing hubs, targeting supply chain efficiency and regional technical capabilities.

    Shifting the European Production Model

    European luxury houses have historically defended the ‘Made in Italy’ label as a core pricing pillar. Gucci’s pivot to Chinese production lines reflects the technical dominance Asian facilities hold over complex athletic shoe construction. Technical footwear demands specialised tooling, bonding agents, and synthetic mesh engineering that Italian artisan workshops rarely handle at volume.

    Kering, Gucci’s parent group, faces pressure to improve margins while defending market share in mainland China. Producing sneakers closer to Asian supply networks cuts shipping times and lowers unit assembly costs on high-turnover casual lines.

    Brand Equity and Consumer Perception

    Consumer reaction across Asia will test how rigid luxury buyers remain regarding country-of-origin labels. Chinese luxury consumers increasingly prioritise product quality, technical execution, and brand relevance over traditional European manufacturing stamps. Younger buyers who purchase luxury streetwear sneakers evaluate comfort and silhouette ahead of heritage claims.

    Other luxury competitors will watch the rollout closely. If Gucci maintains its retail price points without consumer backlash, rival houses will accelerate their own offshore manufacturing plans for technical categories. If shoppers resist, Gucci risks diluting the prestige that supports its footwear margins.

    Supply Chain Realignment

    Sourcing sneaker production in China shortens logistics cycles between Asian factories and regional flagship stores. Direct domestic distribution lowers tariffs and inventory lead times across key East Asian markets.

    Italy will retain production for Gucci’s formal leather shoes, handbags, and core ready-to-wear collections. Segmenting technical streetwear from traditional leather goods allows the brand to split its manufacturing strategy without abandoning its Tuscan heritage entirely.

    The Road Ahead for Footwear Lines

    Gucci plans to distribute the first Chinese-assembled sneaker models across global wholesale and retail channels over the coming season. Sell-through rates across department stores and flagship boutiques will dictate whether Kering expands Asian production into additional accessory categories.

  • Kering Partners with Reliance Brands to Bring Generation Award to India

    Kering Partners with Reliance Brands to Bring Generation Award to India

    Kering is launching its Generation Award in India with Reliance Brands this week. The initiative seeks startups working on circular fashion and resource protection.

    The R|Elan Circular Design Challenge will serve as the exclusive nominating partner, connecting a local innovation network with the global luxury group.

    An awards ceremony is planned in Delhi on October 13, giving emerging businesses a route to wider visibility and industry relationships.

    How the Partnership Operates

    Under the agreement, the R|Elan Circular Design Challenge vets and nominates applicants from across India. Finalists will present solutions addressing raw material conservation, textile recycling and low-impact processing.

    Winners receive industry mentorship alongside commercial visibility across Kering’s portfolio houses. The structure links local research facilities and young apparel designers directly with procurement teams in Paris and Milan.

    What It Means for Indian Apparel

    For Reliance Brands, the tie-up deepens relations with a key European partner. It also positions its R|Elan synthetic and recycled fabric arm at the center of sustainable textile development. Reliance already operates joint ventures and distribution pacts with several luxury labels across major Indian metros.

    Luxury operators across South Asia now treat certified sustainable supply chains as an operational priority rather than a marketing exercise. Sourcing circular materials domestically cuts logistics lead times. It also helps brands meet European Union material traceability standards before raw garments ship abroad.

    Earlier Expansion Steps

    Kering established the Generation Award in China in 2017 to discover material science ventures before expanding the format into other manufacturing territories. The Indian rollout is the first time the programme has integrated directly with an industrial conglomerate’s existing design competition.

    A joint jury will review shortlisted startups through September. The Delhi presentation on October 13 will reveal the winning enterprises and confirm their initial mentoring schedules.

  • China Luxury Label Icicle Hires Former Gucci Head Sabato De Sarno

    China Luxury Label Icicle Hires Former Gucci Head Sabato De Sarno

    China’s Icicle hired former Gucci creative director Sabato De Sarno on Monday to lead its design operations across ready-to-wear, accessories and eyewear.

    His debut collection for the Shanghai-based fashion house will arrive for the autumn/winter 2027-2028 season.

    The Kering connection and design scope

    De Sarno takes direct control of creative direction for both women’s and men’s lines. The Italian designer previously ran design at Gucci, the flagship label of French luxury group Kering.

    The appointment deepens ties between the two businesses. Kering took a minority stake in Icicle in April 2026, giving the Chinese brand financial backing and direct access to European luxury executive networks.

    Chinese brands buying European prestige

    Chinese fashion groups are increasingly hiring established European designers to push their brands upmarket and expand outside mainland China. Icicle built its domestic business on high-end natural fabrics and understated cuts, but matching European heritage houses requires international design pedigree.

    The approach carries clear execution risks. Integrating European creative directors into Chinese corporate structures has produced mixed commercial returns, requiring labels to balance Western aesthetic direction with a core domestic customer base that values different proportions and styling.

    Precedents across the domestic sector

    Down-jacket specialist Bosideng followed the same playbook in 2025 when it hired British designer Kim Jones to lead its luxury line, Areal. French luxury group Hermes took a similar path with Shang Xia, which hired London-based designer Yang Li in 2021.

    Icicle is now preparing its production pipeline and marketing rollout ahead of De Sarno’s first autumn/winter 2027-2028 show.

  • Kering Redirects up to €300 Million to Asia as Regional Sales Grow 12 per Cent

    Kering Redirects up to €300 Million to Asia as Regional Sales Grow 12 per Cent

    Kering has reallocated up to €300 million in capital toward Asia-Pacific markets as regional sales growth of 8 to 12 per cent outpaced softer Western demand across its fashion portfolio.

    Asian territories now generate nearly half of total group revenue, led by Greater China at 20 to 25 per cent, Japan at 8 to 10 per cent, and the rest of Asia-Pacific contributing 10 to 15 per cent.

    Where the Revenue Comes From

    Direct-to-consumer flagship boutiques in cities like Shanghai and Tokyo anchor the group’s regional retail network, capturing full-margin sales. Wholesale partnerships with upscale department stores account for 35 to 40 per cent of total volume, while digital commerce platforms generate 15 to 20 per cent. The standalone eyewear division adds between €1.5 billion and €2 billion annually across all licensed and owned lines.

    Yves Saint Laurent proved the strongest performer in the region. The label expanded at annual rates of 25 to 30 per cent in Asian markets between 2019 and 2023, lifting global house sales from €3.18 billion in 2022 to an estimated €3.7 billion by 2024.

    Brand Performance and Capital Shifts

    Gucci remains the conglomerate’s largest single cash generator, producing roughly €9.5 billion in 2024 revenue. Its share of group intake fell from 52 per cent in 2022 to 48 per cent, prompting management to divert capital toward faster-growing labels and regional retail upgrades.

    Bottega Veneta generated between €1.8 billion and €1.95 billion with gross margins reaching 68 per cent, driven by leather goods demand. Balenciaga showed signs of recovery with projected growth of 5 to 8 per cent after revenues contracted 15 per cent during 2023.

    European luxury groups spent the past two years reassessing their heavy reliance on flagship labels in Asia. While rivals like LVMH diversified early across jewellery and hospitality, Kering’s concentrated bets on fashion houses make regional retail productivity critical to its bottom line.

    Management continues to review smaller portfolio brands generating under €200 million annually, with further divestment decisions expected as capital shifts to primary retail hubs.

  • European Luxury Houses See China Rebound as Burberry Sales Climb 9%

    European Luxury Houses See China Rebound as Burberry Sales Climb 9%

    European luxury groups are tracking a tentative rebound across mainland China, led by high-net-worth spending and demand for premium beauty and apparel.

    July retail sales across the country’s top 25 luxury labels dropped more than 10 percent under tighter scrutiny on offshore wealth, but corporate earnings forecasts point to an autumn turnaround. Household spending on cosmetics has begun to stabilize, while quarterly reports from fashion houses reveal pockets of early momentum.

    Divergence Across Brands

    Burberry Group posted a 9 percent increase in Greater China retail sales during its latest quarter, helped by younger shoppers and localized campaigns. The British fashion house partnered with Chinese National Geography magazine on documentary marketing to lift brand engagement among Gen Z consumers.

    Gucci parent Kering expects sales in the region to return to positive growth by the fourth quarter of 2026. Chief Executive Luca de Meo called the country a strategic priority as trading conditions improved steadily through the latest reporting period.

    LVMH reported steadying demand in mainland stores, citing improving figures for its Sephora retail chain and cognac labels. Swiss group Richemont captured higher tourist spending across Hong Kong and Macau, while Moncler gained ground in market niches.

    Uneven Recovery Profile

    The rebound remains concentrated among high-net-worth buyers rather than broad middle-income households. That divide keeps the pace uneven across retail categories and price points.

    Hermes continues to accelerate sales in the region, while Danish jeweler Pandora is seeing sales declines narrow. For retail operators across Asia, the test will be whether luxury spending broadens beyond top-tier VIP clients before fourth-quarter results land.

  • Kering Bounces Back with Revenue Growth in Q2 Amidst Operational Changes

    Kering Bounces Back with Revenue Growth in Q2 Amidst Operational Changes

    The luxury group Kering has reported an upturn in its performance for Q2, indicating a return to revenue growth. CEO Luca de Meo has attributed this encouraging development to the early signs of progress across Kering’s portfolio, following recent operational and commercial modifications.

    Kering’s revenue for the second quarter reached $4.16 billion, a 1% year-on-year increase, bolstered by an improved retail performance. Comparable sales from directly operated stores witnessed a 2% surge, while wholesale and other avenues of revenue saw a 3% increase. De Meo expressed his satisfaction with Kering’s improved Q2 performance, pointing out the sequential acceleration of growth within the organization, including its Gucci brand, thanks to concerted actions carried out in recent months.

    However, for the first half of the year, revenue stood at $8.22 billion, marking a 3% dip compared to the previous year. On a more positive note, recurring operating income hit the $1.04 billion mark, and the recurring operating margin saw an improvement, reaching 12.8%.

    Kering attributes these results to its ongoing efforts to optimize its store operations. Following the closure of 75 net stores in 2025, the company closed an additional 84 net stores in the first half of 2026, in line with its objective of shuttering 100 stores this year.

    Despite this positive trajectory, Kering noted the persistent geopolitical instability as a factor impacting trade in the Middle East, causing a slight reduction in the group’s second-quarter revenue growth by around one percentage point.

    Sharing the company’s future plans, de Meo revealed that Kering would remain committed to execution, technology investments, and brand development. He emphasized the positive effects of the decisive steps taken by the company to enhance the uniqueness of its brands, streamline its organization, and boost effectiveness throughout the group.

    Questions & Answers

    What was Kering’s revenue for Q2?
    Kering reported a Q2 revenue of $4.16 billion, marking a 1% year-on-year increase.

    What steps is Kering taking to improve its performance?
    Kering is focusing on enhancing the distinctiveness of its brands, streamlining its organization, and boosting effectiveness throughout the group. It has also been closing down stores and investing in technology and brand development.

    What challenges is Kering facing in its operations?
    Geopolitical instability, specifically in the Middle East, has been identified as a significant challenge. This has had a slight impact on Kering’s Q2 revenue growth.

  • 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.