In Fashion at France’s House of Pinault: Executive ChurnAndrew Roberts
The hottest trend at France’s second-biggest luxury group this season: Executive departures as the owner tightens the reins. Asset sales may be next on the runway.
Since September, at least nine senior executives have left businesses controlled by French billionaire Francois Pinault’s family. The latest came this month, when the head of Christie’s International Plc, the auction house’s Americas chief and the top two people at Gucci stepped down.
And the holding company that runs most of the Pinaults’ luxury and fashion brands, Kering SA has explored a sale of German sportswear maker Puma SE as efforts to revive the brand drag into a fifth year, though it’s unclear whether the Paris-based company is still pursuing a sale, people familiar with the matter said this week.
The moves come as Pinault’s family seeks to assert greater control over its empire. In April, Kering CEO Francois-Henri Pinault -- Francois Pinault’s son -- appointed two new business heads appointed to run Kering’s luxury portfolio -- one for fashion and leather goods and the other for jewelry and watches. Marco Bizzarri, who was appointed to head the fashion brands, will now take over Gucci.
The new structure, which was triggered by slowing demand for luxury products, spurred the departures of many of the executives, according to a person familiar with the company who asked not to be identified discussing internal business. Last week, Kering announced the exit of Gucci chief Patrizio di Marco and Creative Director Frida Giannini after five quarters of little to no growth at the handbag maker.
Business is difficult across the Pinault empire, said Rahul Sharma, managing director at Neev Capital. “Quite a few of their brands have had issues.”
Kering fell 0.7 percent, giving the company a market value of about 19.2 billion euros ($23.8 billion).
The family of Pinault, at age 78 France’s third-wealthiest person, has had to wrestle with falling earnings. On top of Gucci’s woes, Puma is on track to see 2014 profit that’s half what it made a decade ago. That calls into question the constant transformation that has become as much a Pinault trademark as the double-G logo on Gucci bags.
Kering declined to comment on the executive departures and possible asset sales.
Over the years, Pinault has been involved in businesses as diverse as lumber, distributing cars in Africa and running French department-store chain Printemps. And the name of the family’s publicly traded business -- now Kering -- has changed four times since 1988.
The group has shed the bulk of the early operations, focusing instead on building a luxury empire to compete with rival billionaire Bernard Arnault’s LVMH Moet Hennessy Louis Vuitton SA. In 1998, Pinault bought Christie’s for $1.2 billion. A couple of years later he went after Gucci, trumping Arnault in a drawn-out battle.
In 2005, Francois-Henri Pinault took the reins of the company now known as Kering. To step out of his father’s shadow, he added a sportswear division, anchored by Puma. His rationale was that just as Gucci shored up smaller luxury brands such as Saint Laurent, Puma’s scale could benefit the likes of surf- and skate-gear maker Volcom and golf club producer Cobra.
On Dec. 2, the Pinaults shocked the art world by installing longtime adviser Patricia Barbizet as CEO of Christie’s, replacing Steven Murphy. She wasted no time restructuring management at the world’s largest auction house, promoting two executives to newly created top-level positions and parting company with the president of its Americas business. Pinault doesn’t plan to sell Christie’s, a spokeswoman for its holding company has said.
Since September, Kering has also replaced the CEOs of Brioni, Bottega Veneta and Christopher Kane and is seeking another for Sergio Rossi. Gucci’s watch head and Puma’s chief commercial officer have also stepped down.
Under Di Marco, Gucci had begun measures to make the brand feel more exclusive as shoppers tired of seeing logoed handbags on the arms of consumers the world over and increasingly sought less showy brands such as Hermes and Celine.
He pressed Giannini to design fewer fabric-based bags in favor of purses made with more expensive materials such as supple calf leather and python skin. And marketing was revamped to stress the label’s provenance and craftsmanship rather than its logo. Still, Gucci sales fell 1.9 percent in the most recent quarter.
Puma’s leaping cat, meanwhile, has stumbled against Adidas AG and Nike Inc. in performance gear, and it failed to capture the imagination of young buyers with sport-inspired streetwear. While the younger Pinault last year installed a new CEO at Puma and is sinking money into sponsorship and marketing, a recent recovery in sales has come at the expense of profits.
“From a portfolio point of view, it doesn’t make sense” for Kering to own Puma, said Mario Ortelli, an analyst at Sanford C. Bernstein in London. “There are no synergies between sport and luxury.”
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