“Ten years ago, PPR was a retail group that generated 17 percent of its sales in luxury…last year, luxury represented 70 percent of Kering sales,” said Jean-François Palus, group managing director, referring to Kering’s previous name, PPR.
“In 2018, luxury will represent 100 percent of our sales,” he concluded.
Speaking before an audience of shareholders that gathered for the annual meeting in an arched corridor of the group’s historic headquarters, Palus summed up the transition.
“In 10 years we have radically changed the nature of the group and we are prepared for the challenges of luxury in the future.”
Kering earlier this week defied expectations with a 36.5 percent sales rise over the first quarter, excluding the effect of currency fluctuations, spurred on by its star brand Gucci. The Italian fashion label has clocked five quarters in a row of growth exceeding 35 percent.
“You see, we are close to reaching our transformation into a pure luxury player, I would even say one of the most pure luxury players,” said chief executive officer François-Henri Pinault, shortly before the vote.
Following the transaction, the bulk of Kering’s Puma stake will be distributed to Kering shareholders, with the Pinault family’s private investment arm Artémis holding a 29 percent stake in the sportswear company. Kering will retain a 16 percent stake and 55 percent will be free float, an amount that Puma chief executive officer Bjørn Gulden earlier this week said was a “healthy mix,” explaining that the larger float has attracted more interest from institutional investors.
A journalist from the French television channel France 2 who said she owned one share questioned Kering executives about an Italian tax investigation into Gucci and reports of an alleged probe into other brands.
Mediapart, a French investigative and opinion newspaper, last month alleged that Kering had saved 2.5 billion euros in taxes it should have paid in Italy and France by attributing wholesale revenues from brands including Gucci and Yves Saint Laurent to its LGI logistics center in Cadempino, Switzerland, thereby benefiting from a lower local tax rate.
Pinault dismissed figures from media reports, which he referred to as “very significant sums” but not possibly being derived from anything “tangible.”
“I am very confident,” about the company’s compliance with fiscal rules and transparency, said Pinault, who was applauded by shareholders.
He described the logistics center in Switzerland, which was established before Kering bought Gucci, as the backbone of the group’s retail activities. Swiss, French and Italian fiscal authorities are fully and precisely informed about the center and its activities, he added.