Today, we are breaking down the global luxury group Kering. You know Kering from its brands Gucci, YSL, Bottega Veneta, Balenciaga, and the list goes on. It's a luxury house similar to LVMH, but LVMH over the past five years is up over 40% and Kering is down over 60%.
To break down Kering, I am joined by Jonathan Eng, portfolio manager at Causeway. We cover the owners and operators of Kering, the Pinault family. We also discuss wholesale distribution versus retail distribution and brand margin profiles. But Kering's core brand, Gucci, is different from much of what you see in luxury, and we spent a significant amount of time diving into it. What makes Gucci more cyclical than understated luxury? Where do we stand with Gucci today? And how does Jon think about all of this as an investor tapping into his historical context in the space? Please enjoy this breakdown of Kering.
For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.
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Show Notes
(00:00:00) Welcome to Business Breakdowns
(00:00:53) Overview of Kering and Its Brands
(00:02:13) Kering's Business Strategy and Challenges
(00:05:02) Historical Context and Family Influence
(00:07:09) Comparing Kering and LVMH
(00:10:27) Financial Performance and Market Dynamics
(00:18:05) Impact of Creative Directors and Brand Evolution
(00:21:28) Modern Analytical Approaches in Luxury Market
(00:23:29) Exploring Kering's Development Centers
(00:24:36) Decentralized Decision-Making in Luxury Brands
(00:25:04) Wholesale vs. Retail: Control and Margins
(00:27:33) Strategic Store Locations and Investments
(00:28:51) Geographical Brand Preferences
(00:30:19) Balenciaga's Advertising Fallout
(00:33:46) M&A Landscape and Future Growth
(00:37:41) Valuation and Market Position
(00:43:06) Operational Gearing and Risks
(00:43:58) Key Lessons from Studying Kering
