Sabato De Sarno - Designer

[LadyJunon]

Marco Bizzari is stepping down from his CEO position:

LUXURY

As Gucci’s CEO Steps Down, Saint Laurent’s Chief Steps Up
Marco Bizzarri led the Italian luxury giant through a historic expansion before the business struggled to bounce back from the pandemic. Parent company Kering announced the move as part of a broader executive shakeup after which Saint Laurent CEO Francesca Bellettini will oversee all the group’s brands.

By ROBERT WILLIAMS
18 July 2023

BoF PROFESSIONAL

Marco Bizzarri, Gucci’s CEO since 2015, is set to exit Italy’s biggest fashion brand. Parent company Kering’s managing director Jean-François Palus will take the reins for a transitional period from September, the group said Tuesday.

Bizzarri led the brand through a period of exponential growth in revenue and profits alongside creative director Alessandro Michele, who exited the house last November.

Together, Bizzarri and Michele pushed through a radical reinvention of Gucci’s product offering, piling on a maximalist, magpie mashup of brand signatures to “Gucci-fy” items ranging from casual wardrobe staples like chunky sneakers and graphic tees to $2,000 handbags. Gucci’s stores, campaigns and social media all fell in line with the revamp, allowing the brand to maximise the visibility of its exuberant message.

The results were historic: from 2015 to 2019, Gucci’s revenues roughly doubled while profits quadrupled — at one point putting the label within swatting distance of sector leader Louis Vuitton.

But Gucci took a harder hit during the pandemic than mega-brand peers like LVMH’s Vuitton and Dior, then struggled to bounce back, in part due to its high dependence on travelling shoppers and aspirational luxury consumers who broadly bought into Michele’s vision.

By the end of 2022, Gucci had returned to growth, surpassing pre-pandemic revenue levels. But the brand was slow to seduce new customers even as it reinforced its offer with more understated, high-end pieces and emphasised its heritage through initiatives like a monogram luggage program fronted by Ryan Gosling, changes aimed at reducing Gucci’s dependence on Michele’s aesthetic, which was losing traction with many customers, and build a more stable brand platform.

A Broader Shakeup
Kering announced Bizzarri’s departure as part of a broader shakeup in its executive ranks: Saint Laurent CEO Francesca Bellettini has been promoted to Kering deputy CEO, with all brand CEOs reporting to her, in addition to her current role. Chief financial officer Jean-Marc Duplaix has also been promoted to deputy CEO for finance and operations.

The moves come as Kering positions itself to navigate a new phase of more moderate growth for the fashion industry following a post-pandemic boom. While the group’s fast and loud aesthetic overhauls (deployed at Balenciaga and Bottega Veneta in addition to Gucci) helped Kering to outgrow rivals before the pandemic, customers have since flocked to brands that have prioritised more stable identities and iconic carry-over products. Hermès, Chanel, and Louis Vuitton have been able to grow sales volumes despite implementing steep price hikes thanks largely to unwavering appeal for their flagship items.

Gucci’s gap with rivals suggests that the strategy that took the brand’s annual revenues from 3.5 billion euros to 10 billion euros may no longer make sense going forward.

By elevating Saint Laurent chief Bellettini as well, Kering is signalling a shift to a more steady approach to managing its brands. Saint Laurent has grown revenues six-fold since Bellettini’s 2013 appointment with a strict approach to managing inventories and distribution (cutting out wholesale and discounting) and a brand building strategy that was more about aesthetic evolution than revolution.

The management shakeup comes as Kering seeks to win back the confidence of investors: the group’s shares are trading roughly in line with their price 5 years ago, while LVMH’s valuation has nearly tripled over the same period.

While some investors may buy into the upside potential of a leadership change, flagship brand Gucci will now need to juggle a CEO transition at the same time as landing a major creative revamp. New designer Sabato de Sarno, a longtime deputy of Pierpaolo Piccioli at Valentino, is set to show his debut collection for the brand in September — and the stakes couldn’t be higher.

Source: BoF

 

[LadyJunon]

WWD's version of the story:

Kering Confirms Exit of Marco Bizzarri

The president and CEO of Gucci will leave the brand on Sept. 23 after the spring 2024 show in Milan, confirming a WWD scoop. Francesca Bellettini, president and CEO of Yves Saint Laurent since 2013, in addition to her current role, is appointed Kering deputy CEO.

By LUISA ZARGANI
JULY 18, 2023, 12:21PM

MILAN — Kering is reshuffling its top management.

In a statement issued on Tuesday evening, the French group confirmed the exit of Marco Bizzarri, president and chief executive officer of Gucci since 2015 and a member of Kering’s executive committee since 2012. WWD was the first to report that sources believed Bizzarri would leave the company. His last day at Gucci will be on Sept. 23, after the brand’s spring 2024 show in Milan.

Francesca Bellettini, president and CEO of Yves Saint Laurent since 2013, in addition to her current role, is appointed Kering deputy CEO, in charge of brand development. All brand CEOs will report to her, and she will be responsible for steering the group houses in their next stages of growth.

To ensure a smooth transition, Bellettini will gradually assume her new responsibilities over the coming months and a new Yves Saint Laurent top management lineup has been put in place.

Jean-François Palus, currently Kering Group managing director, is appointed president and CEO of Gucci for a transitional period. He will relinquish his position on the board of directors of Kering and relocate to Milan.

Jean-Marc Duplaix, chief financial officer since 2012, is appointed Kering deputy CEO, in charge of operations and finance.

Former Chanel global CEO Maureen Chiquet was appointed member of the Kering board.

“We are building a more robust organization to fully capture the growth of the global Luxury market,” said François-Henri Pinault, Kering Chairman and CEO. “I look forward to working with Francesca in her new executive leadership role; while being instrumental in multiplying revenues sixfold since she joined Saint Laurent, she has been a fantastic partner, and all brands as well as the group will now benefit from her expertise.”

Pinault continued by highlighting how Palus oversaw the transformation “into an integrated luxury group, and I count on him to continue infusing discipline and responsibility across the organization and foster the continuing development of best-in-class practices in all our operations. Jean-François has been my right-hand man and a daily sparring partner for several decades, he will now focus his energy on getting our largest asset in top shape, and I couldn’t be more grateful.”

He concluded by thanking Bizzarri “for his spectacular contribution to the success of Gucci and of Kering, and I wish him well in his future endeavors. I am confident that the changes we are announcing today will set Kering on a path to success and profitable growth over the long term.”

Kering Reshuffles Management, Francesca Bellettini Promoted to Group Deputy CEO

All of Kering's brand CEOs will report to Bellettini and Marco Bizzarri will exit Gucci, confirming a WWD scoop.

By LUISA ZARGANI
JULY 18, 2023, 3:17PM

MILAN — Kering’s major management reshuffle revealed on Tuesday leaves the group’s cash cow, Gucci, in a transitional phase and question marks eventually swirling over the top executive position at Yves Saint Laurent after a stellar upward trajectory over the past few years.

Kering is rewarding the person responsible for Saint Laurent’s growth, president and chief executive officer Francesca Bellettini, who appointed Anthony Vaccarello creative director of the French brand in 2016. She has been named a Kering deputy CEO, in charge of brand development. All Kering brand CEOs will now report to Bellettini, who is tasked with steering them in their next stages of growth.

In addition to Gucci and Saint Laurent, Kering is parent to Bottega Veneta, Balenciaga, Alexander McQueen, Brioni, Boucheron, Pomellato, DoDo, Qeelin, as well as Kering Eyewear and Kering Beauté. In 2022, Kering had more than 47,000 employees and revenue of 20.4 billion euros.

But along with Bellettini’s promotion, Kering revealed the loss of one of its star executives, Gucci president and CEO Marco Bizzarri, who will leave the group effective Sept. 23 after the brand’s show in Milan. This confirms a WWD scoop on Tuesday. The September show will mark the debut of Gucci’s new creative director Sabato de Sarno.

Jean-François Palus, currently Kering Group managing director, has been appointed president and CEO of Gucci ad interim. He will relinquish his position on the board of directors of Kering and relocate to Milan until a successor for Bizzarri is named.

Bellettini joined Saint Laurent in 2013 after stints as executive director at Bottega Veneta and Gucci.

A graduate of Bocconi University in Milan, she worked in investment banking in London before joining Prada Group in 2002 and starting her 20-plus year career in fashion.

Saint Laurent reported sales of 2.4 billion euros in 2021, up from 1.7 billion euros in 2020 — a jump from 400 million euros in 2013 when the executive joined the company.

To ensure a smooth transition, Bellettini will gradually assume her new responsibilities over the coming months and a new Saint Laurent top management lineup has been put in place.

Giovanna Brambilla, partner at Milan-based executive search firm Value Search, said that Bellettini “is very much loved by those who work with her; she succeeds in blending strategic vision, understanding of both financial indicators and product knowledge with an ability to build, empower and motivate teams. These are all winning assets — and it’s also a plus that we now see a woman in such a position of responsibility.”

“Kering is in transition, as the relaunch of its mega-brand Gucci is still work in progress,” said Luca Solca, senior research analyst, global luxury goods at Bernstein. “The departure of Marco Bizzarri seems timed to give full visibility to the ‘new chapter’ (just ahead of [Sabato] de Sarno’s maiden fashion show in Milan) and is not totally unexpected. It becomes even more important that the new Gucci team will score some goals and win some matches, to give investors some confidence we are indeed on the right path.”

Jean-Marc Duplaix, chief financial officer since 2012, also has been appointed a Kering deputy CEO, in charge of operations and finance.

“We are building a more robust organization to fully capture the growth of the global luxury market,” said François-Henri Pinault, Kering chairman and CEO. “I look forward to working with Francesca in her new executive leadership role; while being instrumental in multiplying revenues sixfold since she joined Saint Laurent, she has been a fantastic partner, and all brands as well as the Group will now benefit from her expertise.”

Pinault continued by highlighting how Duplaix oversaw the transformation “into an integrated luxury group, and I count on him to continue infusing discipline and responsibility across the organization and foster the continuing development of best-in-class practices in all our operations. Jean-François [Palus] has been my right-hand man and a daily sparring partner for several decades; he will now focus his energy on getting our largest asset in top shape, and I couldn’t be more grateful.”

He concluded by thanking Bizzarri “for his spectacular contribution to the success of Gucci and of Kering, and I wish him well in his future endeavors. I am confident that the changes we are announcing today will set Kering on a path to success and profitable growth over the long term.”

In addition, former Chanel global CEO Maureen Chiquet will join the Kering board in September. Pinault touted Chiquet’s professional experience, “her deep knowledge of our sector and her international background, which will be fundamental to further enrich the diversity of our board.”.

Chiquet, who exited Chanel in 2016, began her career with L’Oréal in France, later moved to San Francisco and rose through the ranks at The Gap as a merchant under the tutelage of Millard “Mickey” Drexler. She also helped launch Old Navy and was president of Banana Republic before being recruited for the Chanel post in 2003. In 2020 she was named chair of Golden Goose.

Rumors about a possible exit of Bizzarri circulated in Milan around the time former creative director Alessandro Michele exited the brand in November. But in January, Pinault told WWD that Bizzarri would stay put, expressing trust in the executive and confidence in the success of the next chapter.

To be sure, sources in Milan said Bizzarri had recently renewed his three-year contract, making his departure now quite sudden.

Bizzarri led a textbook turnaround at the Italian luxury brand. With Michele’s gender-fluid, retro-tinged glamor, the size of Gucci tripled since 2015, reaching sales last year of 9.73 billion euros. The designer left suddenly amid disagreement over the future of the brand, sources said at the time.

Bizzarri was appointed Gucci president and CEO in December 2014, and he promoted Michele to the top creative spot in 2015, with the goal to make Gucci more directional and the brand’s shows must-sees.

Bizzarri started his career at Andersen Consulting, now Accenture. Leaving Andersen for Mandarina Duck in 1993 was a big leap — the first of many in Bizzarri’s career. He developed the brand’s international markets, setting up factories in Shanghai, Hong Kong and Hungary, and, after 10 years, he moved on to Marithé + François Girbaud for a brief stint.

After Michele’s appointment in 2015, Gucci posted growth exceeding 35 percent for five consecutive quarters by the first quarter of 2018, prompting Bizzarri to set a 10 billion euro revenue target for the brand in June that year. However, the brand has struggled over the last few years with slower growth than many of its luxury peers.

Bizzarri chose de Sarno, a Valentino designer, to succeed Michele. Since Michele’s exit, the collections have been designed by Gucci’s in-house team.

As reported, organic sales at Gucci were up 1 percent in the first quarter, compared with a 14 percent drop in the prior three months.

The figures were slightly above a consensus of analyst estimates, which had called for a 1 percent rise in overall comparable sales to 5.04 billion euros. Like-for-like sales at Gucci had been forecast to remain flat.

Gucci has been working on raising the brand’s profile in key markets through initiatives that include the launch of Salon, permanent and temporary spaces where high rollers can order bespoke luggage, exotic leather goods, furniture and high jewelry, with prices ranging from about 40,000 euros to 3 million euros.

The first ultra-luxe Salon store opened in Los Angeles in April, complete with fresh-off-the-red-carpet gowns.

Commenting on Kering’s first-quarter results, Duplaix said the Italian brand saw an acceleration in sales in March and April but remains in the midst of a turnaround plan in China, aiming to enhance the retail experience, admitting weakness compared to some peers.

Kering Shares Climb on Management Shake-up

Analysts gave the moves the thumbs-up, welcoming the setting in place of a new management structure.

By LUISA ZARGANI
JULY 19, 2023, 3:05PM

MILAN — Kering’s shares climbed 7.4 percent on Wednesday as analysts welcomed its management shake-up and amid reports that an activist investor might be circling the luxury group.

After rising 4.29 percent by early afternoon, shares closed up 7.4 percent at 530.40 euros on the Euronext Paris.

As reported, Gucci president and chief executive officer Marco Bizzarri will exit on Sept. 23, after the brand’s first show by creative director Sabato De Sarno, a former Valentino designer who succeeded Alessandro Michele. Yves Saint Laurent CEO Francesca Bellettini was named Kering deputy CEO in charge of brand development.

All Kering brand CEOs will now report to Bellettini, who is tasked with steering them in their next stages of growth. Jean-François Palus, currently Kering Group managing director, has been appointed president and CEO of Gucci ad interim. He will relinquish his position on the board of directors of Kering and relocate to Milan until a successor for Bizzarri is named.

As such, even though the CEO change may further delay the recovery story of Gucci, we think it at least closes a chapter and will enable the brand to move to the next step of the equity story.

Jean-Marc Duplaix, chief financial officer since 2012, also has been appointed a Kering deputy CEO, in charge of operations and finance. Former Chanel global CEO Maureen Chiquet will join the Kering board in September.

Kering’s share price increase on Wednesday also was partially driven by a Bloomberg report, quoting sources, that the group was in talks with defense advisers following approaches by activist investors, including Bluebell Capital Partners Ltd. Bluebell last year made a run at Compagnie Financière Richemont SA, seeking for a major shake-up of that luxury group that eventually was soundly defeated. Bluebell reportedly is pushing for a Kering-Richemont merger — although there has been speculation for several years that the two luxury groups were in talks about a deal, which Johann Rupert, Richemont’s chief, has firmly denied.

Kering declined to comment on the Bloomberg report.

As for the Kering reshuffle, Royal Bank of Canada’s Piral Dadhania wrote in a note that, “We believe Kering’s revised organizational structure and change in leadership roles are a welcome step to further align group talent to better serve the needs of its maisons in our view. We believe this reorganization should be well received by the market.”

The bank did not see Bizzarri’s exit as “a big surprise” as it’s been “a topic fairly central to the investor debate for Kering for some time now, and an important step to instil new (albeit transitory) leadership and a fresh perspective at Gucci.”

The appointment of a co-deputy CEO structure “makes a lot of sense to us” in light of the “steady hand” of Duplaix “that has contributed invaluably to the group in recent years in our view” and Bellettini’s promotion was seen as “a welcome step” given her “proven track record in brand development.” Her new role is expected to provide her with even greater knowledge across the board, noted Dadhania.

In its report, Citibank stated that the executive changes were “well-thought and logical, reinforcing decision-making, governance and succession while showing further determination to transform Gucci.”

Upon the announcements a day earlier, François-Henri Pinault, Kering chairman and CEO, said, “We are building a more robust organization to fully capture the growth of the global luxury market.”

Maria Meiță at Bernstein attributed the shares’ gain mainly to Bizzarri’s exit. “Speculation abounds as to who will be leading the turnaround now… Saint Laurent’s CEO? Chanel’s ex-CEO?”

She said that “Kering’s leadership changes aim to elevate the operational expertise at group level. … Some investors were counting on him [Bizzarri] to do it again, while others were asking for a leadership change so the news was not completely unexpected.”

Meiță believes that what is also “reassuring for investors is that Maureen Chiquet, ex-CEO of Chanel, has been appointed to Kering’s board. She will be instrumental in the elevation strategy of Kering’s brands. All eyes remain on De Sarno’s first fashion show for Gucci in September. The changes increase the risk profile of our OP but we think the risk/reward is still skewed to the upside.”

Carole Madjo at Barclays said Bizzarri’s departure could be seen “as a total surprise considering the challenges faced by the brand. As such, even though the CEO change may further delay the recovery story of Gucci, we think it at least closes a chapter and will enable the brand to move to the next step of the equity story. In our view, this transition phase increases the likelihood of a proper margin reset at Gucci to strengthen the brand for the long term (increase in marketing expenses, higher vertical integration…). As of now, Gucci still expects to deliver flattish margins for FY23 and to return to a margin of 41 percent in the midterm.”

In sync with a rumor that has been circulating for a long time in Milan and that sources reiterated on Wednesday, Bellettini is still considered to be “a good fit” to be Gucci’s CEO, given her success as CEO of Saint Laurent, and her new role as deputy CEO seems to point to an overview of Gucci as well.

In her report, in addition to Bellettini, Madjo also thinks Chiquet could be “a very interesting profile,” and, looking outside Kering, Barclays points to profiles such as Roberto Eggs, as a potential future CEO for Saint Laurent or Gucci depending on how long the transition will be. Eggs is currently Moncler’s chief business strategy and global markets officer. Palus, “whose mission is to strengthen Gucci’s teams and operations, is relocating to Milan, which could indicate that he may hold this position for a decent period of time,” concluded the report.

Kering will release its first half results on July 27 and Barclays expects 4 percent organic growth in the second quarter. The second quarter is expected to be challenging with Gucci posting 5 percent organic growth and Saint Laurent a 7 percent gain, said the bank.

A Milan-based analyst who spoke on condition of anonymity said that Bizzarri’s exit at this moment was unexpected and that Gucci’s “change of strategy was tardy, meaning that it was quite clear earlier on that a change in the master plan was necessary for the brand.”

Speculation about a possible departure of Bizzarri circulated in Milan around the time Michele exited the brand in November. But in January, Pinault told WWD that Bizzarri would stay put, expressing trust in the executive and confidence in the success of the next chapter.

To be sure, sources in Milan said Bizzarri had recently renewed his three-year contract, making his departure now quite sudden.

Bizzarri led a textbook turnaround at the Italian luxury brand. With Michele’s gender-fluid, retro-tinged glamor, the size of Gucci tripled since 2015, reaching sales last year of 9.73 billion euros. The designer left suddenly amid disagreement over the future of the brand, sources said at the time.

Bizzarri was appointed Gucci president and CEO in December 2014, and he promoted Michele to the top creative spot in 2015, with the goal to make Gucci more directional and the brand’s shows must-sees.

Source: WWD

 

[Deleted member 7575]

Honestly can't tell if this is a good thing or a bad thing but my initial reaction was the later.

Wasn't it Bizzari who hired De Sarno? And now he's leaving!?

 

[Lola701]

One thing about KERING, it’s always a mess when it comes to HR.

 

[yslforever]

Honestly can't tell if this is a good thing or a bad thing but my initial reaction was the later.

Wasn't it Bizzari who hired De Sarno? And now he's leaving!?

Gucci missed the 10 $b milestone, Bizzari saved his head last summer when they somehow put the blame on Michele (as if he had a say in the retail strategy or anything else) practically one year ago. Q1-23 showed no growth at all (they officially squeezed out a 1% growth but it looks suspicious) and I suspect it will be the same in Q2, so they are losing market share for nearly two years now. And this is the responsability of the CEO not the CD.
The Pinaults probably don't care about building a strong relationship between CEO and CD at Gucci, they want immediate results in this house, as they are under threat from an activist investor which pushes for a merger with Richemont.
Bluebell takes Kering stake in move to push for change
They need to prove now that this merger with Richemont is not necessary.
((In the event of a classical merger, Kering is the smaller part here, so the Pinaults could lose control of the new entity))

 

[Nimsay]

I didnt realize this guy was from PPPs camp. Im suspecting this new Gucci will be very accessible with good construction.

Richemont’s own fashion brands arent even that successful. Acquring Gucci would just weigh Richemont down.

yslforever’s same Bluebell investment partnership was asking Richemont to focus on Cartier. Now after they missed the earnings they want Richemont and Gucci to merge.

 

[yslforever]

I didnt realize this guy was from PPPs camp. Im suspecting this new Gucci will be very accessible with good construction.

Richemont’s own fashion brands arent even that successful. Acquring Gucci would just weigh Richemont down.

yslforever’s same Bluebell investment partnership was asking Richemont to focus on Cartier. Now after they missed the earnings they want Richemont and Gucci to merge.

Yeah they want some kind of a "Gucci-Cartier-YSL-BV-Boucheron-Van Cleef-watches" holding, which mixes hard and soft-luxury and which can weather different economic cycles, a bit like LVMH does (except that LVMH has a lot of alcohols too and retail). And cut loose the lesser brands like Montblanc, Dunhill, Queelin, etc...
Cartier and Gucci would then be the two front-horses of the carriage.
So anyway, with or without Richemont, De Sarno's Gucci will have to be quickly accessible design-wise but remaining upscale as they want to eliminate their entry prices or raise them. So good luck to them !

 

[LadyJunon]

Gucci missed the 10b milestone, Bizzari saved his head last summer when they somehow put the blame on Michele (as if he had a say in the retail strategy or anything else) practically one year ago. Q1-23 showed no growth at all (they officially squeezed out a 1% growth but it looks suspicious) and I suspect it will be the same in Q2, so they are losing market share for nearly two years now. And this is the responsability of the CEO not the CD.
The Pinaults probably don't care about building a strong relationship between CEO and CD at Gucci, they want immediate results in this house, as they are under threat from an activist investor which pushes for a merger with Richemont.
Bluebell takes Kering stake in move to push for change
They need to prove now that this merger with Richemont is not necessary.
((In the event of a classical merger, Kering is the smaller part here, so the Pinaults could lose control of the new entity))

I didnt realize this guy was from PPPs camp. Im suspecting this new Gucci will be very accessible with good construction.

Richemont’s own fashion brands arent even that successful. Acquring Gucci would just weigh Richemont down.

yslforever’s same Bluebell investment partnership was asking Richemont to focus on Cartier. Now after they missed the earnings they want Richemont and Gucci to merge.

Yeah they want some kind of a "Gucci-Cartier-YSL-BV-Boucheron-Van Cleef-watches" holding, which mixes hard and soft-luxury and which can weather different economic cycles, a bit like LVMH does (except that LVMH has a lot of alcohols too and retail). And cut loose the lesser brands like Montblanc, Dunhill, Queelin, etc...
Cartier and Gucci would then be the two front-horses of the carriage.
So anyway, with or without Richemont, De Sarno's Gucci will have to be quickly accessible design-wise but remaining upscale as they want to eliminate their entry prices or raise them. So good luck to them !

This makes me wonder which labels would be kept or dropped if this merger does happen. Looking at the list of each company's houses and brands, I can roughly theorise on how each one will fit into the Richemont-Kering hierarchy.

Kering is very fashion centric, while Richemont specialises more on watches and jewellery. Richemont does have a few fashion brands, but besides Chloé, they seem to be relatively unknown to the general luxury audience. That said, they have subsidiary dedicated to luxury e-commerce, the YNAP group. On the contrary, Kering's fashion brands are more well-known with Gucci and Saint Laurent being respectable household names. They also have Kering Eyewear that holds licenses for several Richemont brands.

My best estimation on the hierarchy (excluding YNAP and the watchmaking brands) would be something like this:

Cartier/Gucci/Saint Laurent
↓
Bottega Veneta/Boucheron/Van Cleef & Arpels
↓
Buccelati/Balenciaga/Chloé/Delvaux
↓
Alaïa/Alexander McQueen/AZ Factory​

The addition of Kering's fashion houses could allow the entity to trim off some of Richemont's useless bulk like Montblanc, Dunhill, Serapian and the numerous Berluti clones they have.

This also has me wondering about Courrèges and Giambattista Valli, which are owned by Pinault, but aren't under Kering.

 

[Lola701]

This makes me wonder which labels would be kept or dropped if this merger does happen. Looking at the list of each company's houses and brands, I can roughly theorise on how each one will fit into the Richemont-Kering hierarchy.

Kering is very fashion centric, while Richemont specialises more on watches and jewellery. Richemont does have a few fashion brands, but besides Chloé, they seem to be relatively unknown to the general luxury audience. That said, they have subsidiary dedicated to luxury e-commerce, the YNAP group. On the contrary, Kering's fashion brands are more well-known with Gucci and Saint Laurent being respectable household names. They also have Kering Eyewear that holds licenses for several Richemont brands.

My best estimation on the hierarchy (excluding YNAP and the watchmaking brands) would be something like this:

Cartier/Gucci/Saint Laurent
↓
Bottega Veneta/Boucheron/Van Cleef & Arpels
↓
Buccelati/Balenciaga/Chloé/Delvaux
↓
Alaïa/Alexander McQueen/AZ Factory​

The addition of Kering's fashion houses could allow the entity to trim off some of Richemont's useless bulk like Montblanc, Dunhill, Serapian and the numerous Berluti clones they have.

This also has me wondering about Courrèges and Giambattista Valli, which are owned by Pinault, but aren't under Kering.

I’m not sure the merge is actually beneficial when you think about it…

Richemont has been a player in the luxury industry long before the existence of the Gucci Group (ex-Kering).

To build a group, you needs to have a vision, a strong one, that lead to strategy and marketing and investment. You invest in talents and you create the perfect environment for expansion…

I have always found interesting that LVMH went and bought Tiffany to go against Cartier when they had the opportunity to turn Bulgari into their own Cartier (The structure of both brands is almost identical) but I digress…

‘Richemont has a good portfolio of brands. You could think that those brands being relatively small (So they can control the distribution, the positioning and the perception of the audience), they would have invest to have a something stable.

And they have NAP!

What is going on at KERING is a little bit concerning because the cash cow of the group are Fragile. For years, it was Gucci and BV that were driving the sales. You see at LVMH, Dior and Vuitton are always stable. Arnault will push you his brands in the face even you don’t want it. The structures are stable. Dior is now a lifestyle brand and Vuitton is like that supermarket of leather goods…
Dior and Vuitton, without having a strong fashion proposition (if we remove Nicolas), can sell on their own thanks to the aggressive marketing but also the push of certain products.

‘It’s not the same with Gucci. It’s handled like a fashion brand. They are too depend on the impact of a creative director. Their line-up of products cannot compete against the rest.

‘There are too many fragile houses at KERING. Cartier is doing good anyway…

Richemont has an interesting line-up of brands. If they had the right strategy, each brands could exist on their own. They should rethink the purpose of some brands like Serapian (more into lifestyle). It’s not because the heritage of a brand is leather goods that they have to do leather goods…

 

[yslforever]

Cartier/Gucci/Saint Laurent
↓
Bottega Veneta/Boucheron/Van Cleef & Arpels
↓
Buccelati/Balenciaga/Chloé/Delvaux
↓
Alaïa/Alexander McQueen/AZ Factory​

Your guess is close to the goal plans, and a merger would be beneficial in terms of added value for a stakeholder.
YNAP would add also a layer of rationalization in the logistics and retail side.
As Lola said, Kering's cash cow, Gucci, is fragile and the other portfolio brands are volatile - what happened at Balenciaga can happen to another brand. But Kering used to know how to relaunch fashion businesses, they did it several times. One can say it was luck too: why did Balenciaga crash with Wang and burst with Demna ? why Michele was such a success ?
BV with Blazy is not performing as much as they expected. YSL is the one ever-growing, but they just remove their hands-on CEO.
Basically De Sarno has very little freedom here.

 

[Deleted member 7575]

I’m not sure the merge is actually beneficial when you think about it…

Richemont has been a player in the luxury industry long before the existence of the Gucci Group (ex-Kering).

To build a group, you needs to have a vision, a strong one, that lead to strategy and marketing and investment. You invest in talents and you create the perfect environment for expansion…

I have always found interesting that LVMH went and bought Tiffany to go against Cartier when they had the opportunity to turn Bulgari into their own Cartier (The structure of both brands is almost identical) but I digress…

‘Richemont has a good portfolio of brands. You could think that those brands being relatively small (So they can control the distribution, the positioning and the perception of the audience), they would have invest to have a something stable.

And they have NAP!

What is going on at KERING is a little bit concerning because the cash cow of the group are Fragile. For years, it was Gucci and BV that were driving the sales. You see at LVMH, Dior and Vuitton are always stable. Arnault will push you his brands in the face even you don’t want it. The structures are stable. Dior is now a lifestyle brand and Vuitton is like that supermarket of leather goods…
Dior and Vuitton, without having a strong fashion proposition (if we remove Nicolas), can sell on their own thanks to the aggressive marketing but also the push of certain products.

‘It’s not the same with Gucci. It’s handled like a fashion brand. They are too depend on the impact of a creative director. Their line-up of products cannot compete against the rest.

‘There are too many fragile houses at KERING. Cartier is doing good anyway…

Richemont has an interesting line-up of brands. If they had the right strategy, each brands could exist on their own. They should rethink the purpose of some brands like Serapian (more into lifestyle). It’s not because the heritage of a brand is leather goods that they have to do leather goods…

I think in terms of their style and sensibility (inoffensive and boring) and the market they appeal to, Tiffany and Cartier are more aligned. Bulgari seems like a different customer. It would be a mistake to change it just to compete with Cartier.

I think creating groups is largely about strength in numbers. Learnings and infrastructure can be shared. Supply chain, sourcing, logistics, real estate, media buy, etc can all be contracted in bulk and save A LOT of money.

Today, thanks to LVMH, luxury has become more and more about leveraging size and scale to increase margins.

I imagine that any discussions about a merger are centered around how overlaps and efficiencies can be exploited to the benefit of all brands in the group.

A merger would only be a good thing.

The organization of the hypothetical new group would probably be based on opportunities for synergy : a jewelry division, a leather division, a fashion division, etc.

 

[LadyJunon]

I’m not sure the merge is actually beneficial when you think about it…

Richemont has been a player in the luxury industry long before the existence of the Gucci Group (ex-Kering).

To build a group, you needs to have a vision, a strong one, that lead to strategy and marketing and investment. You invest in talents and you create the perfect environment for expansion…

I have always found interesting that LVMH went and bought Tiffany to go against Cartier when they had the opportunity to turn Bulgari into their own Cartier (The structure of both brands is almost identical) but I digress…

‘Richemont has a good portfolio of brands. You could think that those brands being relatively small (So they can control the distribution, the positioning and the perception of the audience), they would have invest to have a something stable.

And they have NAP!

What is going on at KERING is a little bit concerning because the cash cow of the group are Fragile. For years, it was Gucci and BV that were driving the sales. You see at LVMH, Dior and Vuitton are always stable. Arnault will push you his brands in the face even you don’t want it. The structures are stable. Dior is now a lifestyle brand and Vuitton is like that supermarket of leather goods…
Dior and Vuitton, without having a strong fashion proposition (if we remove Nicolas), can sell on their own thanks to the aggressive marketing but also the push of certain products.

‘It’s not the same with Gucci. It’s handled like a fashion brand. They are too depend on the impact of a creative director. Their line-up of products cannot compete against the rest.

‘There are too many fragile houses at KERING. Cartier is doing good anyway…

Richemont has an interesting line-up of brands. If they had the right strategy, each brands could exist on their own. They should rethink the purpose of some brands like Serapian (more into lifestyle). It’s not because the heritage of a brand is leather goods that they have to do leather goods…

Your guess is close to the goal plans, and a merger would be beneficial in terms of added value for a stakeholder.
YNAP would add also a layer of rationalization in the logistics and retail side.
As Lola said, Kering's cash cow, Gucci, is fragile and the other portfolio brands are volatile - what happened at Balenciaga can happen to another brand. But Kering used to know how to relaunch fashion businesses, they did it several times. One can say it was luck too: why did Balenciaga crash with Wang and burst with Demna ? why Michele was such a success ?
BV with Blazy is not performing as much as they expected. YSL is the one ever-growing, but they just remove their hands-on CEO.
Basically De Sarno has very little freedom here.

Funny enough the Richemont-Kering merger isn't very new to the industry. BoF actually proposed the idea of a merger between the two companies back in 2018 and Kering actually made a rejected proposal of a merger back in 2021. To add to that there are rumours of LVMH is "circling" around Richemont.

Kering's houses are very iconic and recognisable, but are extremely fragile in terms of their offerings and identities.

Saint Laurent and Alexander McQueen are the only houses with consistently sales numbers, with both having long term leadership somewhere in the house. Gucci, Bottega Veneta and Balenciaga are volatile in terms of vision, marketing and merchandise. None of them, except have a permanent collection or heritage product, with each range appearing to be fully dictated by the current CEO and creative director.

Richemont has a decent range of fashion houses with much more stable identities, but lots of them are wasting away in terms of offering or infrastructure.

Chloé's offering is too expensive and stuffy for the natural, free spirited image it tries to portray, AZ Factory seems to be on permanently unstable ground, Delvaux is forgettable and the menswear trio (Dunhill, Millar, Purdey) seem to cannibalise each other. Alaïa seems to be successful, but that's mostly due to Mulier's and Serrano's "slow and steady" approach.

As said before, the main idea would be to create a "Cartier/Gucci/YSL/BV/Boucheron/Van Cleef" sort of entity as a peer to LVMH's "LV/Dior/Tiffany/Fendi/Bulgari". If done well, Richemont would probably insert Belletini's YSL strategy across their larger soft luxury houses (Gucci, BV, Chloé, Delvaux), while diversifing/rebranding their smaller houses especially the potential quartet of men's tailoring brands they'll have to deal with post-merge.

 

[Nimsay]

I just think LVMHs edge over Kering is the appreciation for fashion. LVMH is actively seeking new talent and nuturing them - see JW.

I wonder if Sabato can do Alta Moda. I wouldnt mind seeing a Gucci Couture.

Judging by his insta hes inspired by Frederico Fellini, and 70s Italian Disco and I like the Italian focus.


Kering as a whole is missing out on their underutilized HC houses. YSL needs alber elbaz doing HC leave Vacarello to do the RTW. Balenciaga needs haider doing HC (and RTW). That would raise the prestige of both brands.

 

[FashionFanatico]

^ i am very sorry to shatter your dreams, honey, but Alber is in heaven for quite a while now.
Miss him too!

 

[Lola701]

I just think LVMHs edge over Kering is the appreciation for fashion. LVMH is actively seeking new talent and nuturing them - see JW.

I wonder if Sabato can do Alta Moda. I wouldnt mind seeing a Gucci Couture.

Judging by his insta hes inspired by Frederico Fellini, and 70s Italian Disco and I like the Italian focus.


Kering as a whole is missing out on their underutilized HC houses. YSL needs alber elbaz doing HC leave Vacarello to do the RTW. Balenciaga needs haider doing HC (and RTW). That would raise the prestige of both brands.

Please, no Gucci Couture…

But the real difference after all is that KERING is not a group build on the ambition of Francois Pinault or his son. They were the white horse of Tom Ford and Domenico de Sole…
We are talking about a group that got a big portfolio of brands really quick and people who had an experience on retail and who are experiencing things in front of the world.

Arnault started in 1984 from his own personal ambition. I don’t think he cared about fashion per say but he learned how to run a fashion business before he went to attack LVMH and build the group. And the culture of fashion or at least of luxury was passed down to his children. They have an eye for commerce, they can take risks and Delphine has a real eye for fashion.

Arnault is certainly not afraid to deal with big talents and what it comes with.

Obviously, Alber can’t do HC but having two people run a fashion division of a house seems like a torture from a HR pov. And we see how they are doing with HR now…

Couture is not needed when everything works and is in control. Balenciaga was very prestigious under NG. YSL doesn’t need Couture today.
If it’s to have it being like a Balenciaga 2.0, they might just release pieces from the archives.

I really don’t think that Balenciaga HC is that it tbh, I like the Edition line they did under NG and Wang. But it’s there so, we have to deal with it.

 

[yslforever]

I just think LVMHs edge over Kering is the appreciation for fashion. LVMH is actively seeking new talent and nuturing them - see JW.

I wonder if Sabato can do Alta Moda. I wouldnt mind seeing a Gucci Couture.

Judging by his insta hes inspired by Frederico Fellini, and 70s Italian Disco and I like the Italian focus.


Kering as a whole is missing out on their underutilized HC houses. YSL needs alber elbaz doing HC leave Vacarello to do the RTW. Balenciaga needs haider doing HC (and RTW). That would raise the prestige of both brands.

Kering has been desperate to get YSL beauty back, and polish-up the beauty (the L'Oreal version is super cheap). There is actually no reasons why YSL, with a real CD and full operating divisions, can't be as exclusive as Dior or Chanel. Couture is not needed as of now, you can reissue the archives all the way and there will always be many customers. Every week there are people asking the museum for reissues... One women actually came with a dream list of 15/20 looks from 9 collections and send a letter asking the museum to reissue them for her...

On the De Sarno subject, I know it isn't PPP or his decisions, but every seasons I am always surprised by the amount of Valentino pieces going to sales, and by the discounts. But even discounted they are not very appealing... I know it won't happen with Gucci due to brand image, but the RTW at Valentino has always looked off to me.
I am quite open for a disco Gucci, for a couple seasons not more, but I doubt it's the direction they are going, Pinault has ordered to work on the heritage.

 

[grimm]

Miss Tweed posted another scathing assessment of the Gucci turnaround yesterday. Sounds truly a mess there with no direction. I can almost hear the knives sharpening for Sabato and he hasn't even produced anything yet. Going to be a rocky first few seasons for him, no doubt about it!

 

[TaylorBinque]

surely Sabato has a difficult task ahead of him. I wish him all the best. He seems to be very ground and actually in tuned with what's going on in the real world. I am very curious about his approach.

I think what Kering is missing now is how to product iconic products and expand on lifestyle. YSL and Gucci is probably on the best track to do so. I think the biggest problem is always messy HR and the passion of the CEOs. I always feel like Arnault's children are passionate about their projects. Delphine has great eye for fashion. And it really differentiate the brand.

The Kering-Richemont merge feels unnecessary. Richemont portfolio is diverse enough but they just seems to be less passionate about fashion. The Chloe price point and whole sustainable angle is a shame. Cartier is now doing well without any promotion. Their products are way more expensive than Bulgari or Tiffiny (if compared iconic designs) but they are always selling. The asians love them. So I mean with the right management, they can do extremely better.

 

[LadyJunon]

surely Sabato has a difficult task ahead of him. I wish him all the best. He seems to be very ground and actually in tuned with what's going on in the real world. I am very curious about his approach.

I think what Kering is missing now is how to product iconic products and expand on lifestyle. YSL and Gucci is probably on the best track to do so. I think the biggest problem is always messy HR and the passion of the CEOs. I always feel like Arnault's children are passionate about their projects. Delphine has great eye for fashion. And it really differentiate the brand.

The Kering-Richemont merge feels unnecessary. Richemont portfolio is diverse enough but they just seems to be less passionate about fashion. The Chloe price point and whole sustainable angle is a shame. Cartier is now doing well without any promotion. Their products are way more expensive than Bulgari or Tiffiny (if compared iconic designs) but they are always selling. The asians love them. So I mean with the right management, they can do extremely better.

Seeing how Gucci is doing the merger will probably happen regardless. At this point the merger idea has already been in the air for 5 years with BoF suggesting the idea back in 2018:

LUXURY
Kering and Richemont: Why a Mega-Merger Makes Sense
The two luxury conglomerates are both successful in their own right, but their best bet at building a true multi-brand, multi-category giant to rival LVMH is a merger.

By LUCA SOLCA
19 March 2018

BoF PROFESSIONAL
GENEVA, Switzerland — Sustaining growth and maintaining a competitive edge in today's increasingly complex luxury goods industry requires more than simply hitting the right fashion notes. There comes a time when even big-thinking companies need to think bigger in order to secure and optimise their achievements. Three crucial factors come to mind: scale, category leadership and a conglomerate structure. Size helps optimise fixed costs, leadership in multiple categories brings stability and a strong portfolio of brands makes it easier to attract and nurture talent. LVMH has all of this in spades.

Certainly, rival conglomerates Kering and Richemont have scale, but nowhere near that of LVMH, the world's largest luxury group. Sure, they also each hold strong positions in certain categories, but they both lack a meaningful presence in others. Both have also tried to build a broad base. For either group, taking the solo route to realising their potential would be a massive risk. It would also take time. Can anyone really see either Kering or Richemont trying to build what took LVMH — with the advantage of an open playing field — four decades?

So, let’s indulge in some “blue sky” thinking: a merger between Kering and Richemont would make both strategic and operational sense.

It's fair to say Kering has come of age: Gucci's turnaround has been brilliant, going far beyond the rosiest initial expectations; the imminent distribution of Puma shares will finally deliver on Kering's long-stated goal of becoming a luxury pure player; and Saint Laurent and Balenciaga are true growth champions. But despite these achievements, Kering remains significantly smaller than LVMH, frustrated in its hard luxury ambitions and more exposed to brand trivialisation risk than its peer.

The two companies complement each other: Kering with clear strengths in soft luxury, Richemont as a champion of hard luxury.

Richemont has risen on strong demand for jewellery and Cartier and Van Cleef & Arpels lead the sector in branded jewellery. But like Kering, Richemont has unfulfilled ambitions. In soft luxury, Chloé's success is offset by the failures of Dunhill and Lancel. In watches, Piaget, Vacheron Constantin and Jaeger Le Coultre must reinvent themselves if they are to avoid being considered too expensive for new luxury consumers and too bland for collectors.

Furthermore, the two companies complement each other: Kering with clear strengths in soft luxury, Richemont as a champion of hard luxury. The combination would create significant scale advantage and reduce the gap with LVMH. It would also generate synergies worth hundreds of millions.

The big question is whether the respective controlling families would be willing to sacrifice control for the sake of building a stronger, better and more valuable company. This is particularly relevant at Richemont, where the Rupert family holds the majority of the voting rights but only 9 percent of the capital.

Seen from this perspective, a number of recent moves by Kering and Richemont suddenly appear more rational. Why separate Puma just now? Why the hurry? Couldn’t Kering wait for a buyer? Why push Gucci so hard, and not take the opportunity to significantly reduce wholesale, grey market and factory outlet activities? Why secure control of Yoox Net-a-Porter?

It’s also worth noting how Kering and Richemont have recently expanded the areas in which they work together. Cartier has joined Kering Eyewear, the Kering hard luxury brands have moved their presentations from Baselworld to the Salon International de la Haute Horlogerie in Geneva, where Richemont is based, and Kering has found itself more deeply involved with Richemont at Yoox Net-a-Porter.

Blue-sky maybe — but is a merger so farfetched?

The main issue is that Johann Rupert has absolutely no interest in the merger, despite UBS (a Swiss bank) claiming that it would strengthen the company:

LUXURY
Richemont Shares Rise After Report It Rejected Kering’s Approach

By REUTERS
22 March 2021

Shares in Cartier owner Richemont rose on Monday after a fashion blog reported it had been approached by French luxury goods group Kering for a potential merger in January but had rejected the informal offer.

Miss Tweed wrote late on Sunday that a cash-and-shares proposal to merge had been made directly by Kering CEO François-Henri Pinault to Richemont chairman and controlling shareholder, Johann Rupert.

The report said that Rupert, who said in November he had no plans to sell, was unsatisfied with the terms and did not submit them to Richemont’s board.

Speculation over a possible tie-up between Richemont and Gucci owner Kering have been circulating for years but have gathered steam in recent months after LVMH’s takeover of US jeweller Tiffany put pressure on rivals to scale up.

Representatives for Kering and Richemont declined to comment on the report.

Kering, which also owns Bottega Veneta and Yves Saint Laurent, is strong in fashion and leather goods, while Richemont, whose brands include Van Cleef & Arpels and Jaeger-LeCoultre, is best known for watches and jewellery.

But while combining the two would make sense strategically, the family ownership structure at both companies is a big hurdle to what would be the biggest deal ever in the luxury sector.

Kering has a market capitalisation of €74 billion ($88 billion) versus Richemont’s 47 billion Swiss francs ($50.8 billion).

Rupert’s family investment vehicle owns 10 percent of Richemont’s equity, but it has 51 percent of voting rights due to a complex dual share scheme. Kering is 41 percent-owned by Artemis, the holding company controlled by the Pinault family.

Richemont’s shares were 3.8 percent higher in late morning trading in an otherwise flat Swiss stock market, while Kering’s shares fell 1.4 percent.

UBS said in a note on Monday a deal between Kering and Richemont would create a luxury powerhouse capable of challenging LVMH’s dominance in the market.

“Combining the two mega brands of the soft and hard luxury industry, Gucci and Cartier, could address the perceived higher fashion risk of Kering and the perception of mismanagement of Richemont’s smaller brands in its portfolio,” it said.

The issue with Rupert's decision is that despite the successes in Richemont's hard luxury houses, investors are becoming frustrated at the constantly poor performance and image of soft luxury at the house, namely Chloé and Dunhill.

 

[Nimsay]

^ i am very sorry to shatter your dreams, honey, but Alber is in heaven for quite a while now.
Miss him too!

alber died? When was that. Yikes!