Business Breakdowns Kering: It’s Gucci - [Business Breakdowns, EP.199]
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Jan 1, 2025 
Jonathan Eng, a seasoned portfolio manager at Causeway, delves into Kering, the global luxury powerhouse behind brands like Gucci and YSL. He highlights the stark contrast between Kering's challenges—down over 60%—and LVMH's rise. Eng explores the cyclical nature of Gucci, strategic shifts from wholesale to retail, and the critical role of creative directors in brand performance. He offers insights on consumer behavior, pricing dynamics, and the importance of brand reputation, all while reflecting on investment strategies within this complex market.
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Gucci's Impact and Cyclicality
- Gucci represents about half of Kering's revenue and profits.
- Gucci's performance is tied to fashion trends, making it more cyclical than other luxury brands.
Kering's Brand Scaling Expertise
- Kering excels at scaling smaller luxury brands by leveraging its multi-brand expertise.
- They provide support in areas like retail transition, store development, and brand building.
Luxury Stocks and Recessions
- During the 2003 and 2009 recessions, luxury goods stocks declined significantly.
- Richemont, owner of Cartier and Van Cleef, traded at one times book value in 2009, presenting a buying opportunity.