TheChek News Flow

* Alcoa Raised to Hold at CFRA; PT $35

* Apple PT Raised to $225 from $210 at Wells Fargo

* Opendoor Technologies Rated New Equal-Weight at Morgan Stanley

German group received more than €500mn of orders in online sale after severing ties with Kanye West

Sneaker aficionados have snapped up the first batch of Yeezy shoes sold by sportswear giant Adidas since the end of its ill-fated partnership with Kanye West, cutting the risk that the group will have to take a big writedown on its remaining stock.

Adidas stopped selling Yeezy sneakers in October after terminating its highly profitable agreement with fashion designer and rapper West — now known as Ye — after he made antisemitic remarks.

In May, the company announced it had decided to sell some of its outstanding Yeezy inventory because destroying it would force the company to write off another €500mn.

Adidas has said it will donate a significant portion of the proceeds to charities that combat racism and antisemitism.

According to people familiar with the matter, demand at the first online sale of Yeezy shoes, which was spread over the end of May and the start of June, exceeded the company’s most optimistic forecast.

By June 2, towards the end of the sale, Adidas had received orders worth more than €508mn for 4mn pairs of sneakers, the people said. The strength of demand meant Adidas was unable to meet all the orders, particularly for certain sizes and models, they added.

Customers were required to register online in advance and submit their orders for specific models. While the value of the orders received was more than €508mn, the net sales were lower, the people said.

The robust demand has dispelled fears at Adidas’s headquarters in Herzogenaurach that Ye’s antisemitic outbursts and the lack of marketing for the shoes over the past six months would have made the Yeezy brand too toxic.

After joining forces in 2015, Ye developed into an important partner for Adidas.

By 2022, Yeezy generated €1.7bn in sales and close to €700mn in operating profit.

The world’s second-largest sports brand warned earlier this year that it may have its first operating loss in 31 years. It will report quarterly results on August 3.

“Adidas will probably have to update their revenue and profit guidance to reflect the initial sale of Yeezy inventory,” said Thomas Chauvet, head of luxury and sporting goods research at Citibank, adding that signs of strong demand for the unsold Yeezy shoes would be welcomed.

In its first sale, the company offered 15 different Yeezy models, including a large number of cheaper sliders as well as a few pricey models, according to people familiar with the matter. The popular 500 Utility Black, which fetch an average of €268 a pair on online reseller platform StockX.com, sold in Europe within hours, they added.

Within the company, discussions over how much it will donate to individual charities are ongoing, the people added. In a first step, five charities in the US and China, including the Anti Defamation League and the Philonise and Keeta Floyd Institute for Social Change, have been chosen. Making donations of more than €8.5mn across the five charities has been discussed but no decision has been made, the people said.

However, the final amount donated from the inventory sales will be far bigger as Adidas is prepared to pay out a “significant share” of the profit from the Yeezy inventory, the people said.

Adidas declined to comment, pointing to the quiet period ahead of its half-year results.

Adidas also plans to use proceeds from the inventory sale to pay royalties to Ye and meet costs stemming from the ending of the partnership, including laying off staff, closure of production capacity and legal costs.

Chief executive Björn Gulden said in March that Adidas would “probably not make profit” on its remaining Yeezy inventory.

Chart du jour: AI at work

More than one-third of workers in Hungary, Slovakia and the Czech Republic could be affected by automation, according to the OECD. And it’s not necessarily the jobs you’d think: most at-risk are sectors such as construction, farming and transportation, writes Datawatch.

The centre holds

If Brussels was afraid of the far right in power in Spain for the first time since dictator Francisco Franco, yesterday’s results were a relief. But a paralysed parliament and potentially months of political instability is hardly ideal.

Context: Spain’s conservative People’s party (PP) won 136 seats in the 350-member chamber in yesterday’s vote, defeating prime minister Pedro Sánchez’ socialists who won 122 seats. But that, combined with 33 seats for hard-right Vox, was not enough to form a majority.

Spain is the EU’s fourth-largest economy and currently holds the bloc’s rotating presidency, which chairs EU negotiations. Its election — alongside one this autumn in eastern bellwether Poland — is one of Europe’s most consequential votes this year.

Forecasts were for PP leader Alberto Núñez Feijóo to lead a coalition with Vox, marking the first time the far right would have been in government since Spain’s return to democracy after Franco’s death in 1975.

But Vox shed more than a third of its seats as the traditional parties PP and the Socialists gained support.

That’s a positive sign for EU officials concerned that next June’s European parliament elections will see a surge in support for radical parties, fragmenting the chamber and making it even more difficult to reach common positions and pass legislation.

But the rest of the EU must now brace for weeks of messy negotiations, the prospect of Sánchez cobbling together a governing majority with the support of the left and a tapestry of small Catalan and Basque nationalist parties, or repeat elections, as happened in 2015 and 2019.

Feijóo can at least point to winning the most votes — a result that follows triumphs for the right in Italy, Sweden, Finland and Greece over the past 10 months.

But his failure to win power is what really counts. Most had assumed he would give the continent’s centre-right European People’s party yet another seat around the EU council table.

- The meeting was held today, Sunday, in Yokohama, Japan

- The meeting was chaired by Korean CB Governor Rhee Chang-yong

- On the China side, PBOC Party Secretary Pan Gongsheng attended

Kering CEO François-Henri Pinault has parted ways with Gucci CEO Marco Bizzarri. It is a move he feared making and held off doing for months. The towering Italian was much more than Gucci’s boss. He had a say about strategic decisions at Kering and major hires. Pinault did not want Bizzarri to go. He needed him. But as evidence gathered that the new organization Bizzarri had put in place at Gucci was not working and he was losing key staff, he had to go. Investors too wanted him out.

And yet, the timing of management reshuffle looks odd. It’s a first in the history of fashion: a CEO gets the boot just two months before the designer he chose, in this case Sabato De Sarno ex-Valentino, is due to present his first collection. Kering is publishing half-year results on Thursday. The group clearly wanted to announce the reorganization before discussing its results, which are expected to underperform its nearest rivals, especially LVMH. Bizzarri and Kering may also have spent several weeks negotiating the cost of his exit, which is likely to be high. No figure has been announced yet. This is a point on which investors should grill Pinault since journalists are not allowed to ask questions during the Q&A time. It is likely that Bizzarri’s departure was announced on Tuesday because a deal between him and Kering was finally agreed and the sooner investors were told, the better.

This week, Bloomberg News reported that activist fund Bluebell Capital Partners had a taken a major stake in Kering and had recently met with some of the group’s senior management. The report said Bluebell was seeking improvements at Gucci as well as organizational changes and a potential tie-up with Richemont. There has been speculation about such a deal for many years. Last May, Richemont Chairman Johann Rupert confirmed he had rebuffed a merger deal with Kering, a move which Miss Tweed was first to report. “For the record, we said no,” Rupert told reporters in a conference call after the group’s annual results.

Last year, Bluebell tried to obtain change at Richemont and appoint to its board Francesco Trapani, Bulgari’s former boss and ex-head of the LVMH watches and jewelry division. Trapani was to act as a representative of Richemont’s shareholders. Instead, Richemont appointed another person chosen by Rupert and defeated every attempt by Bluebell to force the group to sell its fashion division and merge with Kering. Kering has declined to comment on the Bloomberg report. It is not clear if Kering’s management reshuffle was made under pressure by Bluebell. The Pinault family controls Kering through a 40.9 percent stake and have 59.3 percent of voting rights. Why would Pinault even listen to them? You can only suspect that Bluebell may have found some kind of Kompromat at Kering and may be trying to use that to force change. They are known for using such tactics. Bluebell has not returned calls from Miss Tweed.

The management changes announced on Tuesday are the biggest in years. They also offer insight into the group’s governance issues. But first who’s doing what now?

Francesca Bellettini, CEO of Saint Laurent, is promoted to the role of deputy CEO in charge of all of the group’s fashion and jewelry brands. She becomes the group’s de facto operational CEO, replacing Bizzarri who was fulfilling that role unofficially, industry sources said. In 2012, Bizzarri joined Kering’s executive board and in 2014, a few months before he was named CEO of Gucci, he became CEO of Kering's newly-created couture and leather goods division, directly supervising most luxury brands. That structure eventually disappeared but Bizzarri continued to influence many of the group’s decisions.

Jean-Marc Duplaix, Chief Financial Officer since 2012, will become deputy CEO alongside Bellettini. He will take over most of the functions previously held by Group Managing Director Jean-François Palus who is leaving his position to become CEO ad interim of Gucci. Duplaix will now oversee finance, supply chain, logistics, IT, legal affairs and Kering’s regional corporate heads.

The creation of this new layer of top management confirms what industry insiders have been saying for years: Pinault is not really running the group and appears to need help to do so.

The 61-year-old executive may still be the group’s CEO but he has fewer responsibilities than Bellettini. He will look after Kering Eyewear and the newly created Kering Beauty, duties that were also under the remit of Palus. Pinault will also be responsible for Kering’s sustainability policies, human resources, communication and audits.

Another telling detail about Pinault’s lack of direct involvement is the fact that he finds time to hammer out a deal to invest in U.S. talent agency CAA, which industry experts suspect may have been spurred by his wife, actress Salma Hayek Pinault one of the many celebrities the agency represents. This is a potential distraction for Pinault. Bloomberg News reported earlier this month that Pinault’s Artemis investment company was in talks to buy a majority stake in a deal that could value the company at $7 billion. Artémis has declined to comment.

Some investors would like to see Pinault improving Kering’s governance further. If the group adopted best practices, it would make Bellettini CEO and Pinault would take the role of non-executive chairman. Duplaix could become the group’s managing director. What role will play Palus, Pinault’s close and long-standing associate, once he’s done sorting out Gucci, is not evident. What is certain is that a new finance director will be appointed and that person will likely come from within the group, a source close to Kering said. One possible candidate is Mélanie Flouquet, who was luxury goods analyst at JP Morgan and has been Kering’s strategy director for two years based in Milan.

Bizzarri backed Bellettini’s ascent at Kering. When Bizzarri was CEO of Bottega Veneta between 2009 and 2014, Bellettini was chief merchandising officer and head of communications. Previously, she worked for Gucci as assistant chief merchandising officer.

Bellettini, now 53, started her career as an investment banker. She is known for mastering both finance and business and having a fine sense of what’s “in” and what’s “out” and what products will sell well. Bizzarri suggested she should be named CEO of Saint Laurent. With hindsight, that was one of Pinault’s best decisions. Today, Saint Laurent is Kering’s strongest growing brand. For more than a decade, Bizzarri effectively ran Kering. Now Bellettini has taken his place. A classic case of the protégée becoming the queen, industry insiders say.

Palus also looked after Brioni and jewelry brands Boucheron and Pomellato. These brands will now come under Bellettini’s remit. To best fulfil his new role as CEO of Gucci, Palus will move to Milan, learn Italian, and relinquish his position on the board of directors of Kering. It’s not the first time Palus steps in to sort out a brand. In 2012, he took over the leadership of Puma to help revamp the company following the departure of CEO Jochen Zeitz. Industry analysts noted back then that it took too long for Kering to intervene and sort out Puma. Kering started investing in Puma in 2007. Eventually, in 2018, it spun it off by selling its majority stake to shareholders and giving them an exceptional dividend in the form of Puma shares. Artémis still holds a minority stake in the sportswear brand.

As to who will replace Bellettini as CEO of Saint Laurent, some Kering insiders suggest it could be Federico Arrigoni, the brand’s chief commercial officer and president for Asia Pacific. He has been Bellettini’s trusted right hand and has worked eight years by her side. Previously, he worked for Gucci, mostly in HR functions.

One name often cited by the investment community as the ideal new CEO for Gucci is Roberto Eggs, Moncler’s chief strategy and global markets officer. He is also a member of the executive board of Stone Island, an outdoor brand Moncler acquired last year and which ironically is now run by Robert Triefus, Gucci’s former marketing maestro.

Eggs, who previously worked at Louis Vuitton, has been enjoying a stellar rise at Moncler. The 58-year-old executive is a great communicator and excels at promoting Moncler’s achievement. Investors actually hear from him more often than CEO Remo Ruffini himself. Eggs did not reply to Miss Tweed’s request for comment.

Kering also announced this week that Maureen Chiquet, who was Chanel’s former global CEO for nine years, would join the board in September as an independent director. After being sacked in 2016 by the Wertheimers, Chanel owners, Chiquet wrote a book about women leadership. She is currently chairman of sneaker brand Golden Goose, sits on the board of duvet jacket brand Canada Goose and works as a senior advisor for private equity firm Permira. Chiquet, who was often in conflict with the late Karl Lagerfeld at Chanel, played a key role in helping the company expand its beauty business. She may provide valuable insight to Kering in that field.

So what’s going to happen at Gucci once Bizzarri leaves in September? As Miss Tweed reported last week, internal sources at Gucci say the team does not yet understand where the brand is going.

“Some people are skeptical about Sabato’s vision. What they have seen so far is quite plain without any strong storytelling behind,” one of the sources said. “The only thing they hear is brand elevation, but what does that mean, they don’t know exactly,” said the source summarizing views among Gucci’s creative teams.

Of course, coming after the maximalist Alessandro Michele with geek chic looks, baroque taste and cultural references, proposing a new creative vision is no easy job. Everything will look plain after Michele. Also, Sabato’s supporters will argue that he still has time – though not that much – and he should be given a chance nevertheless.

However, Sabato is not the only issue at Gucci investors should worry about. They may want to grill Kering management about the brand’s leadership put in place by Bizzarri. He has delegated much power to Susan Chokachi, a Gucci veteran who used to lead the brand in the United States and now looks after image and marketing. There is also Maria Cristina Lomanto, who was at Prada’s Miu Miu and is in charge of merchandising and retail.

Chokachi is a blonde American, based in Malibu, California. She is married to actor David Chokachi, who played in the film series Baywatch. Critics say she has an American sensibility which is markedly different from the Italian sensibility infused into the brand under Michele. Some insiders argue she is introducing too bland a vision in the rush to move on from the flamboyant, baroque Michele era. She was behind this year’s flat series of advertising with photos of celebrities holding one of Gucci’s traditional handbags such as the Jackie, the Horsebit or the Bamboo. “These advertising campaigns with celebrities offer no original vision,” one former Gucci employee said. “It’s not good for the brand’s desirability.”

Another problem Gucci insiders cite is that the top echelons of Gucci’s marketing and communications team is either American or French, but not from the country where the brand’s creative and cultural roots lie. Gucci’s global communications director is Frenchman Benjamin Cercio, who joined in November last year from Louis Vuitton where he was international celebrities director. This month, Susan hired Cédric Murac, another Frenchman. He’s in charge of Gucci’s global brand image and content studio. Murac joins from Calvin Klein and spent many years in the beauty industry working for major groups such as The Estée Lauder Companies. How will Murac collaborate with Riccardo Zanola, the independent art director Sabato brought with him? The London-based agency MA+Group that represents him confirmed Zanola had joined Gucci with the title of artistic director working closely with De Sarno. Staff at Gucci fear there could be friction between Murac and Zanola.

People need to get along to create magic and desirability. They cannot thrive without a clear roadmap and positive feedback. Gucci generated more than 70 per cent of Kering’s operating profits in the five years to 2022, analysts estimate. When Palus takes over in September, he will no doubt review the brand’s top management and may get rid of some people Bizzarri hired. No brand the size of Gucci has seen more turnover among its top echelons in the past three years. The Italian label holds a record in that domain and unfortunately, more change is afoot. Kering’s top management should have been worried about this a little earlier. When too many people leave, there’s often a reason behind it.

Piero Cipollone emerges as favourite candidate to succeed Fabio Panetta

Italy will try to maintain its influence on European Central Bank affairs by proposing Piero Cipollone, a senior Bank of Italy official, as its candidate to join the eurozone’s top monetary decision-making body.

Three sources close to the decision said Cipollone was the Italian government’s favoured candidate to replace Fabio Panetta, the ECB executive board member who is set to become Bank of Italy head later this year.

However, he is yet to be formally nominated by Italy’s finance minister Giancarlo Giorgetti. Other eurozone member states could also put forward their own candidates, despite a convention that each of the eurozone’s four big economies is granted one seat on the ECB’s six-strong board.

A successful nomination would maintain votes for two Italians — Cipollone and Panetta — on the ECB’s interest rate-setting governing council, although its 26 members are meant to put their nationalities aside and act in the interests of the overall eurozone.

Italy’s prime minister Giorgia Meloni has frequently attacked the central bank’s moves to rapidly raise borrowing costs, saying last month its “simplistic” approach to combating inflation was likely to hurt European economies more than help them. Panetta, meanwhile, is considered to be one of the more dovish members of the current council, favouring a more cautious approach to raising rates.

Analysts view Cipollone — one of four deputy governors at the Italian central bank — as a solid candidate, although one senior Italian financier said he was “uninspiring” and little known outside the Bank of Italy.

Panetta’s exit deprives the ECB’s six-person executive board of one of only three members with economics training, making it key for his replacement to have such a background. Cipollone ticks this box, having studied economics at La Sapienza University in Rome and Stanford University in California before being a visiting scholar at the University of California, Berkeley. 

Cipollone also has experience in payments, having worked in the balance of payments office after joining the Italian central bank in 1993 and later taken charge of its directorate general for currency circulation and accounting. This could be valuable as Panetta’s successor is likely to take over his role overseeing the ECB’s plan to launch a digital euro.

Italy has also clashed with Brussels, however, over plans to allow local merchants to refuse digital payments for transactions under €60, which were eventually scrapped last year.

Some think Italy could still face a challenge from one of the smaller eurozone countries that have never had a top executive at the Frankfurt-based institution. Spain went without a seat on the ECB board for six years until Luis de Guindos was made vice-president in 2018.

“Cipollone is a good economist with a much broader knowledge than just monetary policy,” said Lorenzo Codogno, a former senior Italian treasury official who is now an economic consultant in London. “He could do an excellent job at the ECB. Yet, it depends on who the other candidates are and whether Italy will be allowed to fill the place.”

There could also be pressure from the European parliament for a woman to be appointed to improve diversity on the ECB governing council, which includes the 20 national central bank governors and where 24 of its 26 members are men. The parliament and ECB have to be consulted on any appointment, which requires approval by EU leaders.

After leaving the Italian central bank in 2007, Cipollone joined the Invalsi education research institute and then became the World Bank executive overseeing Italy, Albania, Greece, Malta, Portugal, San Marino and Timor-Leste and chair of its audit committee. He rejoined the central bank in 2014 but spent a year as economic adviser to former prime minister Giuseppe Conte until September 2019.

The vacancy at the eurozone’s interest rate-setting authority was opened by the decision to move Panetta from the ECB board to Rome when Ignazio Visco’s mandate expires at the start of November. The Italian government and the ECB declined to comment.

Startups in a smattering of pretty diverse sectors raised good chunks of money this week. A dental startup, a reality TV personality-founded shapewear company, and an enterprise software firm led the way. Hard to find any connections there. After those really big nine-figure raises, there was a significant drop off on the list as venture continued a slow summer.

1. Smile Doctors, $550M, dental: Dental startups seem to be catching inventors’ eyes recently. Last month, Birmingham, Alabama-based HighFive Healthcare, which enables a network of dental offices to centralize their operations, closed a $100 million growth investment led by Norwest. This week, Dallas-based Smile Doctors, which has more than 400 dental locations in 28 states, announced it has raised more than $550 million. The dental group did not disclose investors, just saying the round was “funded by doctors along with several large domestic and international healthcare investors.” Founded in 2015, this is the firm’s first announced outside round, per Crunchbase.

2. Skims, $270M, clothing: Kim Kardashian’s apparel brand hit a $4 billion valuation this week after Skims raised $270 million in a funding round led by Wellington Management. It was just early last year that the underwear and shapewear brand raised $240 million in a round led by Lone Pine Capital that valued the company at $3.2 billion. The startup, which offers everything from underwear to loungewear, expects sales to grow from $500 million last year to $750 million this year. It’s also expanding into brick-and-mortar sites. Founded four years ago, the company has now raised $669 million, per Crunchbase.

3. o9 Solutions, $116M, enterprise software: Another company that locked up a nice chunk of cash in January 2022 got another shot of growth capital this week. Dallas-based o9 Solutions, which offers cloud-based solutions that help companies with planning and operations, raised a $116 million round led by General Atlantic’s BeyondNetZero fund. The new investment values o9 at $3.7 billion, up from $2.7 billion since that previous $95 million round a year-and-a-half ago. Founded in 2009, the company has raised $533 million, per Crunchbase.

4. K Health, $59M, artificial intelligence: AI often tops this list, but this week it comes in just a little bit off. New York-based K Health, whose mobile app uses AI to deliver personalized primary care, raised $59 million from the likes of Valor Equity Partners, Primary Ventures and others. The company hit unicorn status back in 2021 when it raised a $132 million Series E at a $1.4 billion valuation — however it was reported its value may have plummeted since. Founded in 2016, the company has raised more than $330 million, per Crunchbase.

5. Hammerspace, $57M, data: Data orchestration platform Hammerspace locked up a $56.7 million round this week led by Prosperity7 Ventures — its first round of institutional investment. The San Mateo, California-based startup, which launched in 2018, helps company’s make use of their unstructured data — which makes up 90% of enterprise data — which could become more important as users look for additional data to train artificial intelligence and machine-learning technologies.

6. Renibus Therapeutics, $47M, biotech: Southlake, Texas-based Renibus Therapeutics, a biopharmaceutical company focusing on the prevention and treatment of cardio-renal diseases, raised $47 million from the initial closing of a Series B. Investors were not disclosed. Founded in 2016, the company has raised nearly $190 million, per Crunchbase.

7. Preply, $42M, edtech: Brookline, Massachusetts-based language learning platform Preply closed its $120 million Series C with an additional $70 million in debt and equity led by Horizon Capital. It was reported $42 million of that capital was equity. Founded in 2012, the company has raised nearly $193 million, per Crunchbase.

8. (tied) Karat Financial, $40M, finance: Los Angeles-based Karat Financial, a financial services platform for creators, closed a $70 million round of debt and equity. The company said $40 million of the round was equity led by SignalFire. Founded in 2019, the company has raised nearly $116 million, per Crunchbase.

8. (tied) Risc Zero, $40M, blockchain: Seattle-based Risc Zero, a zero-knowledge tech developer to make blockchains more accessible, raised a $40 million Series A led by Blockchain Capital. Founded last year, the company has raised $54 million, per Crunchbase.

10. Hightouch, $38M, data: San Francisco-based customer data startup Hightouch locked up a $38 million round led by Bain Capital Ventures. Founded in 2018, the company has raised more than $92 million, per Crunchbase.

The big U.S. deals topped even the global deals list, however there was a noteworthy raise abroad.