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Gucci Owner Kering to Consider Buying Sports Brands
By Bloomberg News
Kering CEO on China Market, Strategy for Gucci
gucci Gucci owner Kering SA (KER) will consider
acquiring sports and lifestyle brands in three years as it
assesses the performance of the Puma label, Chief Executive
Officer Francois-Henri Pinault said.
gucci bags Any deal will hinge on Keringâ€™s ability to reverse the
fortunes of Puma SE (PUM) , Europe â€™s second-largest sporting-goods
maker, which has been undertaking a reorganization since 2009,
he said in an interview in Hainan, China. Pinault, whoâ€™s also
Keringâ€™s chairman, said heâ€™s â€śconvincedâ€ť the Paris-based
company should have a sports- and lifestyle-oriented business.
gucci watches â€śWhen you look at the next 20, 30 years in terms of
economic development of the world, the key markets are young
people very much attracted by brands, very much aware of the
health issues, attracted by sports,â€ť he said in a Bloomberg
Television interview yesterday. â€śLuxury and sports are
structurally, over a long period of time, growing markets.â€ť
gucci outlet stores Kering is seeking new sources of revenue to offset slowing
growth at Gucci, the retailerâ€™s biggest label. Customers are
switching to brands perceived to be more exclusive and Chinese
President Xi Jinpingâ€™s campaign to curb public extravagance
damps luxury sales in the worldâ€™s second-largest economy. Gucci
recorded the weakest quarterly sales growth in four years in the
three months ended December.
Photographer: Simon Dawson/Bloomberg
Kering SA Chief Executive Officer Francois-Henri Pinault said, â€śWhen you look at the next 20, 30 years in terms of economic development of the world, the key markets are young people very much attracted by brands, very much aware of the health issues, attracted by sports.â€ť Close
Kering SA Chief Executive Officer Francois-Henri Pinault said, â€śWhen you look at the... Read More
Photographer: Simon Dawson/Bloomberg
Kering SA Chief Executive Officer Francois-Henri Pinault said, â€śWhen you look at the next 20, 30 years in terms of economic development of the world, the key markets are young people very much attracted by brands, very much aware of the health issues, attracted by sports.â€ť
The French company will spend 70 million euros ($97
million) to strengthen Puma under a new slogan of â€śForever
Faster,â€ť Pinault said. The 51-year-old ruled out selling the
Herzogenaurach, Germany-based sporting-goods manufacturer.
â€śThe portfolio of our sports brands is not finished,â€ť
Pinault said. â€śWeâ€™ve started it but, until Puma is on track, we
wonâ€™t make any acquisitions. Letâ€™s say two, three years from
now, we will look again to try and strengthen that portfolio.â€ť
The first signs of the marketing campaignâ€™s success will
come in September and October, when wholesale orders are taken,
Pinault said. Puma, 84 percent owned by Kering, reported on Feb.
20 full-year profit that declined more than analysts had
â€śI am a bit skeptical about sports and lifestyle,â€ť as the
segment is â€śby far more competitiveâ€ť than the luxury business
and offers lower margins, Mario Ortelli, an analyst at Sanford
C. Bernstein in London , said in an interview. â€śIn this market,
you have both local and global competitors.â€ť
Direct rivals such as Adidas AG (ADS) and Nike Inc. (NKE) are also much
bigger than the smaller producers in the category and will be
able to spend more money on advertising, promotions and research
and development, Ortelli said.
Kering has declined 0.5 percent in Paris trading this year,
in contrast to a gain of 3.4 percent in France â€™s benchmark CAC
40 index. Kering was trading up 2 percent at 152.90 euros as of
The company is in the process of raising prices and
tightening distribution at Gucci to elevate the appeal of its
biggest brand. The strategy is taking a toll on business in
China , as the pace of Gucci store openings slows and Kering
reduces sales of entry-level luxury products, Pinault said at a
post-earnings presentation. Chinese customers account for more
than $1 in every $4 spent on luxury goods worldwide, Bain & Co.
Kering will spend more money this year to market the
results of its Gucci product revamp and wonâ€™t replace its
creative director or its chief executive officer, Pinault said.
The company, which owns other luxury labels such as Bottega
Veneta and Yves Saint Laurent, is increasing sales of those
brands as customers increasingly seek exclusivity in their
Bottega Venetaâ€™s share of Keringâ€™s sales was 9.7 percent in
2012, more than double the proportion in 2010, according to data
compiled by Bloomberg. Yves Saint Laurent â€™s share also more than
doubled in the period, to 4.9 percent. Gucci accounted for 37
percent of revenue in 2012, compared with 24 percent in 2010,
the data show.
To contact Bloomberg News staff for this story:
Liza Lin in Shanghai at
Benjamin Haas in Hong Kong at
Stephen Engle in Beijing at
To contact the editors responsible for this story:
Stephanie Wong at
Tom Lavell, Celeste Perri
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