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Kering to Focus on Organic Growth

The French luxury goods group is focusing on its existing labels but it might pursue smaller acquisitions if the right opportunities present themselves.

TOKYO — Kering managing director Jean-Francois Palus said Thursday that the French luxury goods group is focusing on organic growth of its existing labels but it might pursue smaller acquisitions if the right opportunities present themselves.

“We are going to calm down with the acquisitions but again, some of them could come to complement [the group’s portfolio],” the executive in Tokyo at a briefing on the company’s strategy in light of its name change from PPR to Kering.

But he went on to say that these potential purchases would be considered small or “not so meaningful” considering the size of the group’s other assets. Kering has made several acquisitions recently including Christopher Kane, Pomellato, Brioni and Chinese jeweler Qeelin.

Palus said Kering, which owns brands such as Gucci, Saint Laurent and Bottega Veneta, is more interested in brands with global potential rather than provenance. The executive said the company found this characteristic in Qeelin, which will open at least one store in Japan while continuing to target Chinese consumers.

“A non-European brand, of course, Japanese, Chinese, Brazilian, American, African, could be of interest,” he said.

Echoing recent comments from other executives, Palus said the Japanese luxury market has gained a newfound momentum. In particular, he noted that younger consumers are shopping more and Kering’s brands have adapted their products in terms of fit and style to appeal to Japanese consumers and encourage them to trade up from small leather goods to handbags, ready-to-wear and shoes.

Kering’s luxury division saw its first-quarter sales in Japan rise 10 percent in constant currency terms.

As for the yen’s weakness, he said Kering will look at its pricing strategy but it will also leverage its merchandising and product mix to help offset the currency effect.

“The pricing of the product maybe one of the answers to the situation but this will not be the only one,” he said.

In terms of a slowdown in the Chinese market for luxury goods, Palus acknowledged that dynamics there are changing as consumers become more sophisticated and demanding. Kering needs to pay close attention to pricing, consumer service and product assortment to lure shoppers, he said.

“Fortuitously enough, we have various degrees of maturity for our brands and some of them are just accessing the Chinese market, whereas others have been in China for a decade,” he said. “All of our brands are enjoying good growth in China.”