Kering (formerly PPR) has transformed itself from a conglomerate to the world's third-largest luxury group (behind LVMH and Richemont). The company's stable of global luxury brands includes a 99% stake in Italian luxury goods company Gucci Group, and luxury brands Alexander McQueen, Balenciaga, Bottega Veneta, Stella McCartney, and Yves Saint Laurent, among others. The group's other activities include the multichannel merchant Redcats and the German athletic shoemaker PUMA. More than half of Kering's sales are generated outside of France. The firm is refocusing its operations on the luxury goods and sport and lifestyle retail sectors, through selective acquisitions and divestments.
To that end, Kering is in the process of selling off its international catalog-and-Internet retail business, Redcats, piece by piece. To date, the sales of various Redcats units have garnered more than $1 billion for PPR. The company also spun off money-losing book-and-music retailer Fnac (31% of 2010 sales) in 2013. Fnac operates about 170 stores in France, five other countries in Europe, and Brazil.
Further adding to its portfolio of luxury labels, in 2013 Kering agreed to buy an 81% stake in the Italian jeweler Pomellato to complement its other jewelry brands. Earlier in the year, it acquired a 51% stake in the luxury designer brand Christopher Kane, whose fashions have been worn by the Duchess of Cambridge. Kering completed its takeover of Italy's menswear-only brand Brioni in January 2012. Brioni's fashions are sold in more than 75 company-owned boutiques and 500 wholesale outlets worldwide. Far removed from the realm of sophisticated men's apparel, in mid-2011 Kering made US action sports youth brand Volcom a wholly-owned subsidiary via a tender offer for the California company's shares in a deal valued at $608 million. The Volcom purchase furthers its aim to building a "sportlifestyle" (defined as sports performance business that caters to its customers' lifestyle) business. Volcom supplies clothes and accessories to action sports enthusiasts, such as surfers and snowboarders.
On the luxury side of the group, Kering's 51%-owned Alexander McQueen fashion house scored a huge coup in 2011 when Creative Director Sarah Burton, who succeeded McQueen following his death in 2010, was chosen to design the gown worn by the Duchess of Cambridge at her April wedding to Britain's Prince William. To grow its luxury goods business, Kering is looking beyond mature markets in Western Europe and North America to emerging markets, including China. (Emerging markets accounted for 35% of the group's luxury business in 2010.) Paris jewelry house, Boucheron, is expanding in China where it already operates several stores. Under the terms of the deal with its partner Peace Mark Group, the jewelry chain will open 10 more stores in China over the next five years. Chasing after healthy jewelry consumption in China, Kering bought a majority stake in jeweler Qeelin in late 2012 to open stores on the mainland and Hong Kong. Kering is also strengthening its luxury watch business. In mid-2011 the company took control of Switzerland-based Sowind Group, which makes timepieces under the Girard-Perregaux and JeanRichard brands. Kering, which held a more than 20% stake in the Swiss watchmaker, boosted its holding to 50.1%.
Kering's luxury brands outperformed its other operations in 2010, with sales increases in the double digits compared with 2009. The rebound it the demand for luxury goods in mature markets, and growing demand in developing economies, drove sales gains across the group's luxury holdings. By comparison, Fnac, Redcats, and PUMA posted sales gains in the low single digits. Overall, 2010 group revenue increased more than 7% vs. the prior year, when restated to account for the discontinuation of Conforama. Recurring net income from continuing operations jumped 56% over the same period.
To underscore its ongoing transformation into a luxury and sporting-goods specialist, PPR changed its name to Kering in June 2013. The new name (which is meant to evoke the idea of caring) is the company's fifth since it began trading on the Paris stock exchange in 1988.
Kering is run by François-Henri Pinault, the son of its founder François Pinault. Self-made billionaire François Pinault has a cache of prestigious businesses, including auction house Christie's. His investment firm, Artémis, owns more than 40% of Kering.