The revamp of classic high-end fashion brands including Gucci and Balenciaga has helped French parent Kering deliver a stellar set of results for the first half of the year, with scion Francois-Henri Pinault telling CNBC that the company’s success is not as fickle as fashion itself.
“What we did is that we transformed this business model,” said the chairman and chief executive officer (CEO) of Kering, speaking to CNBC on Thursday from the company’s Parisian headquarters, explaining that the brands’ couture offerings now have continuity from one season to the next.
“What you bought at Gucci early 2016 you can still wear it, you are still in the same creative environment…the volatility that we used to have on that category is not there anymore, that’s very important,” he added.
Kering has been handsomely rewarded in recent financial reporting quarters for taking a risk in on appointing individualistic, edgy and in some cases lesser-known talent as creative directors at some of its iconic brands – most notably Alessandro Michele at Gucci, Demna Gvasalia at Balenciaga and Anthony Vaccarello at Yves Saint Laurent.
Gucci delivered a 43.4 percent jump in revenue for the first half of 2017, with Yves Saint Laurent and Balenciaga tracking close behind on 28.5 percent.
Meanwhile, over at the company’s sports & lifestyle division, Puma followed up on the confidence it demonstrated in raising its guidance for the second time in three months on Wednesday by reporting 15.7 percent revenue growth.
Mergers and acquisitions have been a persistent theme in the luxury fashion sector, with Michael Kors’ takeover of high-end shoemaker Jimmy Choo on Tuesday just the latest example.
Yet, Kering has long maintained that it would prefer to focus its efforts and resources on developing its existing brands rather than seek growth via external means – a point reinforced by Pinault as he confirmed to CNBC that he was “very satisfied” with the company’s existing stable of brands.
“We built the portfolio to really have something really balanced between categories, price segments, and style,” he explained, noting that he did not even look at Jimmy Choo.
“The reason is that all my brands are very strong in that category. Gucci is one of the best player in the shoe business, Saint Laurent is very strong, Balenciaga is doing an amazing job in the shoe business too – so I don’t need a specialist,” asserted Pinault, who is the son of the founder of Kering’s previous incarnation, PPR.
The company’s attempts to harness the spending power of the so-called Millennial generation and Generation Z have been fiercely strategic and demonstrably successful. The combined cohort is represented by those aged around 35 and under.
“Gucci is selling 50 percent of all sales to these people…Saint Laurent 65 percent of the turnover is made with millennials. It means that we have a core category of customers that are between 25 and 35…The attractiveness of couture, of the ready to wear is much higher for that clientele than it used to be for older people before,” said the Kering chief.
“So the momentum that we are enjoying in couture is not just due to the few months or few seasons, it is there to stay,” Pinault declared.
Trending up: Gucci captures millennial to help Kering unveil more eye-catching results