Discussion: The State of Kering

[yslforever]

So, it's really the end of Kering. All of Ford and De Sole's work was for nothing. One thing I'm wondering about is the future of the brands:

Gucci makes around €10bn in revenue and I'm assuming that a full acquisition would be around €20-30bn (a very modest estimate). That number is too big of an immediate purchase for most companies and I don't see LVMH looking to buy a brand that could cannibalise their cash-cow. Gucci's near future will probably be similar to Burberry's situation, a standalone brand split between several shareholders.

Saint Laurent and Bottega Veneta will probably be bought by a larger luxury group. Saint Laurent has insane cultural value and Bottega is equipped with a background in leather expertise. I wouldn't be surprised if LVMH or Richemont does a dual purchase. LVMH could use them to replace some of their weaker brands (Givenchy, Marc Jacobs, Berluti, Patou, Kenzo, Pucci), while Richemont could use them to build a much stronger business foundation in soft luxury.

Balenciaga has a equal possibility of being sold to a larger group or a smaller group/entrepreneur like Schiaparelli or Vionnet. Outside of the industry and fashion historians, the brand doesn't have a super strong cultural value with the general public knowing it as the meme brand. McQueen and Brioni will probably be sold a to smaller group/entrepreneur or will be lost to the sands of time, while Valentino will probably be bought back by Mayhoola.

TL,DR: The brands that are big, but not monolithic, will probably be fine. The brands on either extremes will have less predictable futures.

Let's be honest, once Pinault sells all of these brands and leaves the luxury, he'll be mostly dead to us. He'll still own Giambattista Valli and Courrèges, but they exist outside of Kering and he seems to much less involved in those brands.

Do not exclude a L'Oreal diversification...

 

[LadyJunon]

Do not exclude a L'Oreal diversification...

I didn't think about that.

Especially because they already own YSL Beauty. They also own Mugler, Azzaro and there's a possibility of them acquiring Armani too.

That said, they might just simply licence the fashion operations like Estée Lauder did with Tom Ford.

 

[yslforever]

Historically many fashion houses were bought back by the perfumes companies, Chanel parfums and Chanel, Christian Dior Parfums and Dior, Puig is doing the same thing right now ... It's not a novelty...

 

[PDFSD]

So, it's really the end of Kering. All of Ford and De Sole's work was for nothing. One thing I'm wondering about is the future of the brands:

Gucci makes around €10bn in revenue and I'm assuming that a full acquisition would be around €20-30bn (a very modest estimate). That number is too big of an immediate purchase for most companies and I don't see LVMH looking to buy a brand that could cannibalise their cash-cow. Gucci's near future will probably be similar to Burberry's situation, a standalone brand split between several shareholders.

Saint Laurent and Bottega Veneta will probably be bought by a larger luxury group. Saint Laurent has insane cultural value and Bottega is equipped with a background in leather expertise. I wouldn't be surprised if LVMH or Richemont does a dual purchase. LVMH could use them to replace some of their weaker brands (Givenchy, Marc Jacobs, Berluti, Patou, Kenzo, Pucci), while Richemont could use them to build a much stronger business foundation in soft luxury.

Balenciaga has a equal possibility of being sold to a larger group or a smaller group/entrepreneur like Schiaparelli or Vionnet. Outside of the industry and fashion historians, the brand doesn't have a super strong cultural value with the general public knowing it as the meme brand. McQueen and Brioni will probably be sold a to smaller group/entrepreneur or will be lost to the sands of time, while Valentino will probably be bought back by Mayhoola.

TL,DR: The brands that are big, but not monolithic, will probably be fine. The brands on either extremes will have less predictable futures.

Let's be honest, once Pinault sells all of these brands and leaves the luxury, he'll be mostly dead to us. He'll still own Giambattista Valli and Courrèges, but they exist outside of Kering and he seems to much less involved in those brands.

I think you're underestimating LVMH willingness to snap up Gucci or any other Kering brand fully.....as much as LV & Gucci compete with each other in general, besides having travel bags heritage and and an allover monogram that's well known all over the world it's not the same thing as business/brand with heritage.

Gucci is underdeveloped when it comes to core icons products (that goes beyond a jackie or bamboo much of the older icons are not well known or developed, Gucci´s travel department products are practically kindergarten compared to LV´s continuative offer), as well as its balance of exclusive perception with the top 1 % clients and more constant product base for the aspirational/base customers one timers or repeated customers is totally off.

Via LVMH then if Gucci goes back to a more sleek jet set sexy italian version of the original gucci even pre Tom Ford add the social & cultural impact brought by alessandro and tom before as well etc you have a brand with big potential and not in their portfolio. (we can debate and fine tune all the details but it's a brand they would not want to miss having to reshape it not to mention the beauty & fragrance buy back )

LVMH rather have it all than risk another group competing with them on the 10 billion plus level.

Money is money does not matter how or what brand brings it in as long its all growing and is plus plus !!!!

I could see Mayhoola be ambitious to get most of kering brands they have deep pockets not excluding Gucci they have already relations with the group owners

Marc Jacobs, Berluti, Patou, Kenzo, Pucci are small change they don't pump that much money in them as they rather see them survive on their own merits till the right CD and brand match catches the right spirit of the time and dies off again.

Givenchy is a pride thing as it's a HC house that can be a next Dior and they would not want to loose it to someone else and see it flourish again without controlling it 100 %

 

[yslforever]

I didn't think about that.

Especially because they already own YSL Beauty. They also own Mugler, Azzaro and there's a possibility of them acquiring Armani too.

That said, they might just simply licence the fashion operations like Estée Lauder did with Tom Ford.

It makes a lot of sense for L'Oréal to acquire both Armani and Saint-Laurent: it's an obvious diversification, L'Oréal has already beauty and fragance rights so they might have a right to block a potential buyer (like a veto right), both Armani and Saint-Laurent are produced in Italy, they could use the same plants for both brands.
Plus Meyers would love it but he can't stand Bellettini and has refused many times to be photographed with her - who, btw, isn't anymore in charge at Saint-Laurent, Paul Guyot-Sionnest is the de facto CEO now, she is too busy with all the other brands. She still has the title but isn't in charge of the day-to-day and had left a lot of decisions to Guyot-Sionnest.

Some people have expressed reservations about a merger with Richemont, due to the Rupert family pro-Apartheid stance. It's so weird to hear those people raising moral and ethical issues now ...

 

[LadyJunon]

I think you're underestimating LVMH willingness to snap up Gucci or any other Kering brand fully.....as much as LV & Gucci compete with each other in general, besides having travel bags heritage and and an allover monogram that's well known all over the world it's not the same thing as business/brand with heritage.

Gucci is underdeveloped when it comes to core icons products (that goes beyond a jackie or bamboo much of the older icons are not well known or developed, Gucci´s travel department products are practically kindergarten compared to LV´s continuative offer), as well as its balance of exclusive perception with the top 1 % clients and more constant product base for the aspirational/base customers one timers or repeated customers is totally off.

Via LVMH then if Gucci goes back to a more sleek jet set sexy italian version of the original gucci even pre Tom Ford add the social & cultural impact brought by alessandro and tom before as well etc you have a brand with big potential and not in their portfolio. (we can debate and fine tune all the details but it's a brand they would not want to miss having to reshape it not to mention the beauty & fragrance buy back )

LVMH rather have it all than risk another group competing with them on the 10 billion plus level.

Money is money does not matter how or what brand brings it in as long its all growing and is plus plus !!!!

I could see Mayhoola be ambitious to get most of kering brands they have deep pockets not excluding Gucci they have already relations with the group owners

Marc Jacobs, Berluti, Patou, Kenzo, Pucci are small change they don't pump that much money in them as they rather see them survive on their own merits till the right CD and brand match catches the right spirit of the time and dies off again.

Givenchy is a pride thing as it's a HC house that can be a next Dior and they would not want to loose it to someone else and see it flourish again without controlling it 100%

I see that now.

Acquiring Gucci would be probably a display of power for LVMH, considering that they're really the only luxury group that could afford it. If they move the branding back to Ford-era Gucci, they should be able to easily differentiate the brand from Louis Vuitton.

Mayhoola could be another possibility, but they appear to be significantly smaller (they do have links to the Qatari royal family, though).

Givenchy aside, I don't understand their insistance on keeping so much dead weight in the group (maybe another display of power). That's why I thought I would be a good idea for them acquire YSL and BV as I feel they could do more for the group.

It makes a lot of sense for L'Oréal to acquire both Armani and Saint-Laurent: it's an obvious diversification, L'Oréal has already beauty and fragance rights so they might have a right to block a potential buyer (like a veto right), both Armani and Saint-Laurent are produced in Italy, they could use the same plants for both brands.
Plus Meyers would love it but he can't stand Bellettini and has refused many times to be photographed with her - who, btw, isn't anymore in charge at Saint-Laurent, Paul Guyot-Sionnest is the de facto CEO now, she is too busy with all the other brands. She still has the title but isn't in charge of the day-to-day and had left a lot of decisions to Guyot-Sionnest.

Some people have expressed reservations about a merger with Richemont, due to the Rupert family pro-Apartheid stance. It's so weird to hear those people raising moral and ethical issues now ...

I definitely see L'Oreal acquiring YSL and Armani (maybe other Kering brands too), but I do have one concern: their lack of experience.

The fashion brands they currently own are Azzaro and Mugler (both purchased from Clarins), both of them being small niche operations holstered by perfume sales. YSL and Armani would be a huge step up in size and visibility, which could f*ck them over if they're not prepared with appropriate management.

 

[gallianostan]

saint laurent would be a BRILLIANT get for LVMH. they could bring back the couture, acquire YSL beauty, and make an absolute killing. three (or four if you count fendi) couture houses under one umbrella is a massive win. i know they already own loro piana but they could also, with a large investment, elevate bottega to an hermès-level leather goods house. gucci seems like overkill and unless they have a solid plan to bring back to the ultra-sexy jet-setting st. tropez ford days i feel like the ship has sailed on that one... letting go givenchy seems like a dumb idea, they just need someone with a strong creative vision. let it be the fashion-forward couture house while conservative and rigid dior makes the money. either way, kering's days are clearly numbered. payback for cutting sarah loose and keeping demna.

 

[donyan]

Is it possible for one group to hold that much power ? I personally would like to see Kering get their act together, it’s strange to think that one sole person would own this much.
It’s difficult to imagine that less 10 percent at Gucci would destroy the world’s second biggest luxury group. It’s sad to say as I’m still rooting for SdS but at this point it might be better to accept that he wasn’t the right choice. It seems obvious even to me that he doesn’t have the scope, be it because of his lack of vision or meddling by the people around him.

 

[blueorchid]

they could bring back the couture, acquire YSL beauty, and make an absolute killing

Logistically, I don't know if they could bring back the couture. I think the licensing to the couture is owned by the The Fondation Pierre Bergé - Yves Saint Laurent (so... Madison Cox, I guess). I think it's best to let YSL couture rest. The last thing the world needs is more sh*tty couture.

I still think Givenchy is a complete waste of everybody's time.

 

[gallianostan]

Logistically, I don't know if they could bring back the couture. I think the licensing to the couture is owned by the The Fondation Pierre Bergé - Yves Saint Laurent (so... Madison Cox, I guess).

you're so right, i'd completely forgotten about that. so ownership of the saint laurent brand is effectively split three ways - bergé, kering and l'oréal... yves' couture fell off massively after the 70s anyway lmao

edit: i just had a look and i'm pretty sure that the foundation specialises in the preservation of archive saint laurent couture, clothing, drawings, cultural projects related to yves... etc. i'm not sure there's a legal obsatcle preventing kering from reintroducing couture? maybe i'm wrong idk

 

[NYLA22]

Is it possible for one group to hold that much power ? I personally would like to see Kering get their act together, it’s strange to think that one sole person would own this much.
It’s difficult to imagine that less 10 percent at Gucci would destroy the world’s second biggest luxury group. It’s sad to say as I’m still rooting for SdS but at this point it might be better to accept that he wasn’t the right choice. It seems obvious even to me that he doesn’t have the scope, be it because of his lack of vision or meddling by the people around him.

I wonder that myself, and also...does any company in any industry own so many brands as LVMH?! It's really remarkable the monopoly they are building.

 

[gallianostan]

petition for the dumas family and the wertheimers to form a chanel-hermès superpower

 

[blueorchid]

@NYLA22 I think that Nestlé owns like 2,000 brands or something. 😳

 

[FashionFanatico]

petition for the dumas family and the wertheimers to form a chanel-hermès superpower

name me one (real) good reason reason why they should do that?

 

[FashionFanatico]

I wonder that myself, and also...does any company in any industry own so many brands as LVMH?! It's really remarkable the monopoly they are building.

and this is just their luxury brand portfolio...
loreal.com

 

[Kimihiro]

The luxury space is too consolidated nowadays for my liking that I fear a Kering collapse and further consolidation is bad for creativity. That said I'd like for LVMH to get Bottega and Saint Laurent. Gucci is a headache. Gucci has been too fashion that it's hard to what they want for it. Dior might be there sooner even.

Saint Laurent could be a behemoth if it's put back together. IDK what's stopping them from doing a faux-couture or 'metiers d'art' show as a big, institutional brand thing. I guess though that Anthony is not the right person for that.

 

[Lola701]

The son quite enjoy the luxury/fashion business, living in LA, the father wants a full repositioning, getting out of luxury like they got out of timber or retail (Printemps, La Redoute), but is not convinced by the entertainment business the son wants to pursue.
The father wants to cash out before the conglomerate makes loss...

Father Pinault is afraid François may lose it all like Lagardère?
I think the entertainment business is not really viable outside of marketing or institutional purpose.

I can share Pinault’s concerns as it doesn’t seems like François Henry is knowing what to do.

And the perspective of succession are quite thin no?

So what will Pinault’s group will be about without Kering? Just Artemis? Is it possible to destroy the group as it is and just keep some entities for Artemis?
I think Gucci is nevertheless a jewel. And having Gucci/BV as the only entities in the Artemis entity in place of Courreges or Giambattista Valli could be good.

The real struggle is McQueen and all the other houses (jewelry and watchmaking).

 

[LadyJunon]

I like to think that LVMH isn't stupid enough to attempt at a monopoly, but we never know. That said, they still have a lot of road bumps: Hermes, Chanel, Prada, Richemont, the possible diversification of beauty groups like Estee Lauder and L'Oreal. I don't see LVMH trying to acquire all of Kering's brands out of the gate.

saint laurent would be a BRILLIANT get for LVMH. they could bring back the couture, acquire YSL beauty, and make an absolute killing. three (or four if you count fendi) couture houses under one umbrella is a massive win. i know they already own loro piana but they could also, with a large investment, elevate bottega to an hermès-level leather goods house. gucci seems like overkill and unless they have a solid plan to bring back to the ultra-sexy jet-setting st. tropez ford days i feel like the ship has sailed on that one... letting go givenchy seems like a dumb idea, they just need someone with a strong creative vision. let it be the fashion-forward couture house while conservative and rigid dior makes the money. either way, kering's days are clearly numbered. payback for cutting sarah loose and keeping demna.

Saint Laurent could be a behemoth if it's put back together. IDK what's stopping them from doing a faux-couture or 'metiers d'art' show as a big, institutional brand thing. I guess though that Anthony is not the right person for that.

YSL would be powerful under LVMH's management, mainly because its history is very much impregnated in French culture (high and pop). Buying YSL Beauty would be cent on a dollar, but revivng Couture could come with a few roadbumps (the Berge foundation), but I would put it past them to try and pull a "Saint Laurent Atelier/Prive/Limited Edition" and forgo the "Haute Couture" moniker altogether. Acquiring BV would allow them to satisify their need for a quiet luxury brand (better than Celine under Hedi could) that they could elevate to compete with Hermes, Zegna, etc.

Father Pinault is afraid François may lose it all like Lagardère?
I think the entertainment business is not really viable outside of marketing or institutional purpose.

I can share Pinault’s concerns as it doesn’t seems like François Henry is knowing what to do.

And the perspective of succession are quite thin no?

So what will Pinault’s group will be about without Kering? Just Artemis? Is it possible to destroy the group as it is and just keep some entities for Artemis?
I think Gucci is nevertheless a jewel. And having Gucci/BV as the only entities in the Artemis entity in place of Courreges or Giambattista Valli could be good.

The real struggle is McQueen and all the other houses (jewelry and watchmaking).

I don't have much hope on a succession in the near future. FH Pinault has five children, but they're quite young: his oldest, Francois, was born in 1998, making him 25-26 years old. That said, Artemis could become a cushion for Gucci, where they could exist as a self-sufficient brand (like Courreges and GBV already do).

McQueen will most likely suffer quite a bit. Its small size and specific history might not be attractive to a luxury group and a entrepreneur might not be able to keep up with the demands of a storied luxury house. Balenciaga will probably be an easier sell. The hard luxury brands will probably be bought by Richemont, depending on the cultural strength of their names.

View attachment 1263583
and this is just their luxury brand portfolio...
loreal.com

I just want to precise that a good chunk of their fashion names are beauty licences. The only fashion operations they own are Azzaro, Cacharel and Mugler.

 

[yslforever]

Btw, the YSL Couture archives belong to the Foundation but the couture rights, and surprisingly other YSL rights, belong to Madison Cox personally. De Sole bought YSL in a hurry and forgot to buy all the rights from Pierre and Yves.
Kering asked Pierre for a couture relaunch with Hedi, it never happened...
Somehow they never bothered to ask for Anthony ...

BV missed the opportunity to become an Hermès when they decided Maier's work wasn't good enough and went for a New Bottega, instead of reinforcing Maier's team...

 

[LadyJunon]

@FashionFanatico Let me correct myself: they're currently teasing a relaunch of Cacharel fashion division. No announcement of a creative director though.