TheChek News Flow

Deputy chief executive Francesca Bellettini tasked last year with turning around flagship brand

A top Kering executive has said the French luxury group is going back to basics as it is battling to revive the fortunes of its underperforming flagship brand Gucci.

Speaking at the Financial Times’ Business of Luxury conference on Monday, Kering deputy chief executive Francesca Bellettini said that Gucci needed to build “sound foundations” after a period of fast growth that was now coming to an end.

“What we are going to do at Kering, [and] at all the brands learning from Gucci, is to become more focused — even while growing — on the foundation,” Bellettini told the conference.

“It is true in life but also in business that sometimes it’s easier to go fast, fast, fast . . . If I draw a parallel to the luxury industry, if you don’t create that structure underneath in terms of operational capability, efficiency practices, planning you don’t have [a] sound foundation,” she said.

The Kering veteran was referring to a period of rapid growth at its brands led by Gucci, but that has now tapered and left fissures in the business exposed.

Belletini was appointed to her role last year to oversee all of the group’s brands — which include Bottega Veneta, McQueen and Balenciaga — as part of a reshuffle at the top of the group led by billionaire chief executive François-Henri Pinault.

Paris-listed Kering has been dogged by the underperformance of Gucci, which accounts for half of group sales and two-thirds of profits. Belletini, who has been at the French group for more than two decades, also remains chief executive of Saint Laurent, the group’s second-biggest brand by revenues.

Kering is focused on turning around Gucci and improving performance across the group amid an industry-wide slowdown. It has suffered more than competitors such as LVMH and Hermès, as demand for Gucci’s maximalist aesthetic popularised by former star designer Alessandro Michele waned.

Kering’s sales fell 10 per cent in the first quarter, compared to 3 per cent growth at industry giant LVMH. Paris-listed rival Hermès posted 17 per cent growth in revenues. Pinault is now betting on Gucci’s new creative director Sabato de Sarno, whose collections are being rolled out in stores, to revive growth.

“Don’t waste the opportunity coming from a good crisis, because in a crisis you really have to focus on what you can control. That has been my motto with my team all of my career,” Belletini said.

“We had already started by February . . . to work on enhancing the brand’s attractivity, working on exclusivity of the brand, the quality and the efficiency,” she said.

This included making crucial hires in the team around Gucci. A new head of operations is focusing on initiatives such as reducing lead times to get leather goods to market.

“It’s not going to be a one man show at Gucci . . . We are going through a transition, not a revolution.”

Belletini believes De Sarno, the first “outsider” to be appointed as Gucci creative director, can bring fresh perspective on how to rebuild the brand. By always promoting creative directors internally “you can build ways of working that are not always right for the future”, she said.

In China, dozens of startups have been competing to develop conversational artificial intelligence for the Chinese market. Now some are starting to pull ahead, in part due to backing from tech giants with large cloud operations like Tencent and Alibaba.

Among them is Moonshot AI, developer of a chatbot that can process millions of Chinese characters in a single prompt. The one-year-old startup’s executives have been in talks with investors about raising money at a $3 billion valuation, before the investment, from investors including WeChat operator Tencent, according to a person involved in the discussions. Just a few months ago, the Beijing-based startup raised $1 billion from Alibaba and others at a pre-money valuation of about $1.5 billion, already giving it one of the biggest war chests among Chinese AI developers, according to the person.

The Takeaway

• Beijing-based Moonshot AI is in talks with investors including Tencent

• The startup is raising money at $3 billion pre-money valuation

• The talks come just a few months after a $1 billion funding round led by Alibaba

Moonshot’s capital raising plans point to a shift happening among China’s AI startups. Unlike in the U.S., where only a handful of companies including OpenAI, Google and Anthropic have emerged as leaders in developing the most advanced LLMs, no Chinese tech company has taken a significant lead in AI development. And China blocks OpenAI and other U.S. competitors by requiring government approvals for generative AI products. This opportunity led Chinese founders to launch dozens of startups in what Chinese media have dubbed the “hundred-model war.”

That field is starting to narrow as Alibaba and Tencent, which operate major cloud computing businesses that can service these AI models, put their weight behind certain startups in addition to building their own models. Alibaba has invested in Chinese startups that develop LLMs such as MiniMax, 01.AI, Zhipu AI and Baichuan AI. It’s also invested in Moonshot, in part with cloud credits for Alibaba Cloud.

Tencent is likely to invest in Moonshot, the person said. That stake could pave the way for deeper collaborations between Tencent’s popular WeChat messaging app and Moonshot AI’s chatbot. Tencent has already backed MiniMax, Zhipu AI and Baichuan AI.

A Tencent spokesperson declined to comment. Moonshot AI’s founder didn’t respond to an emailed request for comment.

For Chinese LLM developers, chatbots’ ability to process and summarize long texts—such as books, research reports and meeting notes —has become a key battleground. That’s similar to a feature Google touted when it announced a new version of its Gemini LLM in February.

Moonshot AI has an edge in this aspect. When the startup launched the first version of its Kimi chatbot in October, it was capable of processing up to 200,000 Chinese characters in a single prompt. Then in March, it unveiled an upgraded version of Kimi that can handle 2 million characters. During the week when the new version became available, Kimi's website traffic surpassed that of Ernie Bot, a popular AI chatbot from search giant Baidu, making it the most visited in China, according to web analytics service Similarweb. Since then, Baidu and Alibaba have upgraded their own LLMs and introduced long-text processing features.

The company, whose Chinese name, Yue Zhi An Mian, means “the dark side of the moon,” has also developed voice and coding assistants—two areas where Google and OpenAI are also competing. But Moonshot AI is mostly known for its text chatbot, which it’s been offering for free. Similar to OpenAI, it's likely to introduce a paid version for more active users, though it’s not clear when. However, business customers and developers in China are more reluctant to pay a premium for software than their U.S. counterparts.

Yang Zhilin, a young assistant professor at Tsinghua University, founded Moonshot after receiving his doctorate from the School of Computer Science at Carnegie Mellon University and working in the AI labs of both Google and Meta Platforms, according to his profile on code-sharing site GitHub. China’s HongShan, formerly known as Sequoia Capital China, was an early investor in the startup, The Information reported in April 2023.

Legal & General says it is confident Anglo’s management can deliver as miner fends off interest from larger rival

Legal & General Investment Management, one of Anglo American’s largest shareholders, has come out in support of the miner’s break-up plan as BHP has just two days to either raise its takeover bid or walk away.

London-listed Anglo said last week that it would break itself up as it tried to convince shareholders that it had an attractive future as a standalone group after rejecting two offers from BHP.

Under the radical plan, Anglo would hive off its De Beers diamond and South Africa-based Anglo American Platinum businesses as well as its coking coal assets. The group would instead focus largely on its iron ore and copper assets, which are coveted by BHP.

“The plan outlined by Anglo American is a radical but attractive strategy to create value for long-term investors,” said Nick Stansbury, head of climate solutions at LGIM, which is a top 10 investor with slightly less than 2 per cent of Anglo’s stock.

“We agree the execution of this plan will be challenging for management to deliver on, but we are confident in their ability to do so over time.”

BHP’s second all-stock proposal valued Anglo’s shares at £27.53 and the company at £34bn, up from approximately £25 a share, or £31bn, in the first approach.

Under UK takeover rules, BHP has until 5pm on Wednesday to lodge a formal offer or walk away, giving the board of the world’s largest miner hours to make a last-ditch effort to bring Anglo to the negotiating table.

Stansbury of LGIM, which also holds almost 1 per cent of BHP shares, said that the pair of proposals from BHP “are far from reflecting fair value for the business. For a takeover offer to be attractive an offer would need to be at a reasonable premium to fair value.” 

Anglo has said the bids “significantly” undervalue the company and are “highly unattractive” for shareholders, in part, because they require its South Africa-based platinum and iron ore divisions to be demerged as part of the deal.

Analysts at JPMorgan last week said a takeover premium of between 10 per cent and 30 per cent on its estimate of Anglo’s fair value would require an offer of between £30.50 and £36.

A recent bounce in BHP’s shares has helped push the value of its second bid towards £30. Shares in Anglo were trading at £26.90 on Monday.

The pursuit of Anglo has been rancorous, with BHP chief executive Mike Henry voicing disappointment at Anglo’s refusal to engage in negotiations.

LGIM’s Stansbury said the asset manager’s discussions with Anglo indicated that the mining company’s board was “acting appropriately with regards to the level of engagement they are having with BHP”.

He added: “We do not see a clear reason for the Anglo board to change their stance in this regard unless an offer that represents a reasonable premium to the underlying fair value of the assets Anglo holds is proposed.”

However, some Anglo investors remain sceptical that the miner can execute its ambitious break-up.

“Anglo would be hard pressed to execute a break-up of the company in a clean and timely manner,” said an investor who owns shares in both Anglo and BHP.

“I would back BHP to execute on that and unlock more value . . . it comes down to which management team you back to execute on a break-up.”

BHP and Anglo American declined to comment.