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What’s next for Kering?

By Don-Alvin Adegeest

18 Feb 2022


Image: Gucci via Kering
Kering’s sterling results released on Thursday show Gucci’s strength hasn’t declined, even if desirability is waning in some groups. With sales up 31 percent over last year, Gucci is still the strongest horse in the Kering stable, accounting for 60 percent of its revenue and approximately 70 percent of profits.

In its trading statement Kering said it is a major player in a fast-growing market, enjoying solid fundamentals and a balanced portfolio of complementary brands with strong potential. This is certainly true. Although lagging behind LVMH, Kering has come out of the pandemic stronger and more prominent compared to early 2020.

Bottega Veneta, Balenciaga and Saint Laurent all had double digit growth too, with the former showing no signs of slowing down despite the unexpected exit of is creative director Daniel Lee last November.

Less reliance on wholesale

Kering reiterated it aims to seek same-store revenue growth with less reliance on wholesale channels. By focusing on its own retail network and strategic partnerships where it doesn’t have stores, it can manage distribution and exclusivity, have full control over pricing and see larger profit margins.

Since 2017 Gucci has been drastically cutting its wholesaling business, in its home market of Italy it decreased its multi-brand distribution from 110 to 38 stores in 2020. Kering is taking notes from Gucci’s playbook, with a similar strategy for its other ready-to-wear houses.

"We are stopping all online wholesale for our brands,” François-Henri Pinault, Kering Chairman and Chief Executive Officer, said in an earnings call. Its strategic priorities are straightforward, the Group said. Growings its Houses in a sustainable manner and ending online wholesale. Instead it will focus on cross-business growth platforms in the areas of e-commerce, like e-concessions.

E-concessions are a relatively new online selling model, and according to Glossy is defined as brands selling their collections through a retailer’s platform while retaining more control over pricing, marketing and product catalog than they can have with a traditional wholesale model.

With Kering’s total revenue up 35 percent to 17.7 billion euros, an increase of 13 percent over 2019, it is streets ahead of the general luxury goods sector, which grew 4 percent over 2019.

The stock market responded positively, too, with news of Kering’s earnings seeing its stock price up as much as 7.9 percent on Thursday.