François-Henri Pinault, the CEO of luxury group Kering, recently highlighted the positive financial performance of the company. During the presentation of Kering’s annual results, Pinault expressed his satisfaction with all of their owned brands surpassing their sales from 2019. This is particularly significant considering the prestigious brands under Kering’s ownership, such as Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen, and Boucheron.
Jean-Marc Duplaix, the CFO of Kering, provided further insights into the group’s financial progress. He revealed that online sales had tripled between 2019 and 2020 and accounted for over €2 billion out of the total €17.6 billion in sales. Duplaix also mentioned that Bottega Veneta experienced an impressive 32% growth compared to 2019, achieving over €1.5 billion in just two years. The other brands under Kering, including Balenciaga, Alexander McQueen, and Qeelin, contributed an additional €1 billion in sales compared to the previous year, demonstrating substantial and sustainable growth. The management team confidently stated that they have the financial capacity to pursue acquisitions if opportunities arise.
Pinault discussed different aspects of Kering’s business strategy. One significant focus is price adjustments, as the company aims to rebalance its product portfolio. Kering has faced challenges related to inflation in transportation and raw materials, as well as exchange rate differences, resulting in price discrepancies. However, Pinault assured stakeholders that consistent pricing across different markets is a priority, with regular price reviews every season. He emphasized the significance of product sophistication to maintain exclusivity and desirability, reflecting their dedication to luxury and higher-end products. This commitment has led to an increase in the average selling price across all product categories.
The CEO also highlighted the importance of creating brand value. Luxury brands must strike a delicate balance between volume sold and product value. While certain categories may have restrictions on sales volume, an increase in product value compensates for that. Pinault stressed the significance of finding a balance that aligns with the brand’s development. Kering’s emphasis on creativity in ready-to-wear has helped attract a younger clientele and expand the appeal of luxury goods across generations. However, the success of luxury brands relies on being both creative and authentic, appealing to high-end clientele with sophisticated offerings.
Pinault discussed growth opportunities within the menswear market. While specific sales volume figures were not provided, he expressed that there is significant potential to expand the menswear lines of Gucci and Saint Laurent. Historically, Kering has prioritized womenswear, which has been successful. However, given the growth in the menswear market, Pinault believes it is time to rebalance the offerings between menswear and womenswear across the different brand houses.
The CEO also addressed the future of wholesale. Currently, direct sales account for a majority of Kering’s total sales, with Gucci leading at 91%. Pinault emphasized the long-term vision of reducing wholesale to ensure brand exclusivity and desirability. Kering has already commenced reducing wholesale at Saint Laurent, Bottega Veneta, and Balenciaga. The company aims to control prices and brand perception by primarily operating through its own stores and e-commerce channels. Additionally, Kering plans to expand its direct distribution networks into new areas, particularly mid-sized cities in the United States.
Pinault also touched upon emerging trends in the industry, such as Web3 and the Metaverse. Kering has established an innovation lab specifically dedicated to these topics and already has dedicated teams at Gucci and Balenciaga. The company takes a proactive approach, avoiding a “wait and see” mentality that is prevalent in the luxury industry. Pinault highlighted the potential disruptions in e-commerce and customer relationship management that Web3 could bring. Kering is also exploring augmented reality technologies and cryptocurrency payments as part of its digital opportunities.
In conclusion, François-Henri Pinault’s analysis of Kering’s financial performance demonstrates the company’s sustained growth, surpassing market averages. By emphasizing luxury, product sophistication, and brand value, Kering has achieved strong sales figures across its brands. The CEO’s focus on expanding menswear, reducing wholesale distribution, and embracing digital innovations further solidify Kering’s commitment to remaining competitive in the luxury market.
Here are two useful links for more information on Kering’s annual results:
Kering’s Official Website
Kering’s Environmental, Social, and Governance Strategy
