Kering Expands Luxury Portfolio with Valentino Amidst Moderate Revenue and Executive Changes

Kering, the renowned luxury conglomerate that owns brands like Gucci, Yves Saint Laurent, and Bottega Veneta, has recently made headlines with its strategic moves in the luxury market. On Thursday, the company reported a modest 2% year-over-year revenue gain in H1, ending on June 30, totaling 10.1 billion euros (approximately $11.1 billion at current exchange rates). The figures show steady progress, but the company faces challenges as it lags behind some of its competitors like LVMH and Richemont.

One of the significant developments for Kering was its acquisition of a 30% stake in the prestigious fashion house Valentino for 1.7 billion euros. The deal signifies a broader strategic partnership between Kering and Mayhoola, with the potential for Mayhoola to become a shareholder in Kering. This partnership further solidifies Kering's position in the luxury universe and aligns with the company's vision to expand its luxury footprint.

Valentino, with its 211 directly operated stores in more than 25 countries, has been an attractive investment for Kering. In 2022, the fashion house recorded revenues of 1.4 billion euros, under the leadership of its CEO, Jacopo Venturini, who previously held a key role at Kering-owned Gucci.

While Kering's performance in the second quarter showed 3% growth on a comparable basis, the company faced the departure of Gucci's former president and CEO, Marco Bizzarri, adding to the recent changes in leadership. To ensure a smooth transition, Jean-François Palus, the managing director of Kering Group, was appointed to oversee the firm for a transitional period.

Gucci, the crown jewel of Kering's portfolio, contributed to over 50% of the company's total revenue in 2022. Its first-half revenue for 2023 showed a 1% increase on a comparable basis, amounting to 5.1 billion euros. The brand experienced a 1% growth in its directly operated retail network, while wholesale revenue declined by 3%. Despite this, its recurring operating income reached an impressive 1.8 billion euros for the same period.

On the other hand, Yves Saint Laurent enjoyed a more robust performance, with a 7% increase in first-half revenue on a comparable basis, totaling 1.6 billion euros. The brand attributes this success to strong sales in ready-to-wear and leather goods retail. Meanwhile, Bottega Veneta's revenue remained unchanged during the same period.

François-Henri Pinault, Kering's chair and CEO, expressed confidence in the company's future prospects. He highlighted the continued investment in the desirability and exclusivity of their luxury brands while maintaining a high level of profitability. The recent acquisition of Creed fragrance house also fits into Kering's strategy to expand its presence in the luxury market and accelerate the growth of Kering Beauté.

As part of the efforts to enhance stewardship of the luxury houses, Kering announced several executive changes. Jean-Marc Duplaix, the long-serving CFO, was appointed deputy CEO in charge of operations and finance, while Francesca Bellettini took on the role of deputy CEO in charge of brand development, in addition to her position as the president and CEO of Yves Saint Laurent. All brand CEOs at Kering will report to Bellettini.

Despite some executive departures earlier in the year, Kering remains committed to its vision of strengthening its luxury portfolio and staying at the forefront of the luxury lifestyle market. As the company looks forward to the remainder of the year, the investments made and the strategic moves taken are expected to drive its continued success.

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