Closing Stock Market SummaryThe S&P 500 decreased 0.7% on Friday, as risk sentiment remained pressured by geopolitical uncertainty, disappointing growth-stock earnings reactions, and expectations for tighter monetary policy. The benchmark index was down as much as 1.2% intraday and up as much as 0.3%.
The Dow Jones Industrial Average also declined 0.7% while the Nasdaq Composite (-1.2%) and Russell 2000 (-0.9%) fared slightly worse.
Ten of the 11 S&P 500 sectors closed lower, with the heavily-weighted information technology sector (-1.1%) exerting influential weakness at the bottom of the standings. The consumer staples sector (+0.1%) was the only sector that closed higher, eking out a 0.1% gain.
Regarding Russia-Ukraine, the U.S. maintained that a Russian invasion was imminent, even as Russia's foreign minister accepted an invitation to meet with Secretary of State Blinken next week. Mr. Blinken would travel to Europe for the meeting on the condition that there is no invasion of Ukraine.
With the market closed on Monday for Presidents' Day, buyers preferred to wait and see for what transpires over the long weekend. There was a precautionary trade in the Treasury market, where the 10-yr yield declined four basis points to 1.93%. The U.S. Dollar Index rose 0.3% to 96.09. Oil prices settled lower ($91.21, -0.55, -0.6%).
The decline in long-term rates provided little relief for the growth stocks, as investors were dismayed to see another round of steep, earnings-driven declines in the space. Roku (ROKU 112.46, -32.25, -22.3%), DraftKings (DKNG 17.29, -4.77, -21.6%), and Redfin (RDFN 22.86, -5.78, -20.2%) each plunged more than 20.0% following their reports.
The 2-yr yield, meanwhile, held steady at 1.57% as Fed officials continued to prepare the market for rate hikes.
Briefly, New York Fed President Williams (FOMC voter) said he supports steadily raising rates, starting in March. Cleveland Fed President Mester (FOMC voter) also advocated for a March rate hike, adding it would be appropriate to remove accommodation at a faster pace if inflation doesn't moderate as expected.
Separately, DuPont (DD 78.77, -0.96, -1.2%) agreed to sell the majority of its Mobility & Materials business to Celanese (CE 144.25, -8.00, -5.3%) for $11 billion in cash.
Reviewing Friday's economic data:
- Existing home sales increased 6.7% m/m in January to a seasonally adjusted annual rate of 6.50 million (consensus 6.08 million). Total sales in January were down 2.3% from a year ago.
- The key takeaway from the report is the push to buy existing homes in January as mortgage rates increased -- and were expected to increase further. That left unsold inventory at a record low, which is going to keep price pressures elevated and prospective buyers, particularly first-time buyers, facing an affordability pinch in the face of such lean supply for lower-priced homes and higher mortgage rates.
- The Conference Board's Leading Economic Index decreased 0.3% m/m in January (consensus +0.2%) following a revised 0.7% increase (from 0.8%) in December.
When the market reopens on Tuesday, investors will receive the Consumer Confidence Index for February, the FHFA Housing Price Index for December, the S&P Case-Shiller Home Price Index for December, and the preliminary IHS Markit Manufacturing/Services PMIs for February.
- Dow Jones Industrial Average -6.2% YTD
- S&P 500 -8.8% YTD
- Russell 2000 -10.5% YTD
- Nasdaq Composite -13.4% YTD
Boss’ Rebrand Is Moving Fast
A social media-first approach focused on creating authentic content has leapfrogged the company’s drastic transformation.
DUBAI, United Arab Emirates — The words “Be Your Own Boss” lit up the Dubai desert sky last weekend as the brand unveiled its see now buy now spring 2022 collection in a film featuring a choreographed army of celebrities, influencers, and content creators marching across the sand dunes in relaxed sportswear. Actors, sports figures and TikTok stars celebrated together at a camp in the desert, staking their place as the future of the brand once best known for its tailored suiting. Led by the catchy viral new tagline, Boss is quickly reshaping how they are viewed in the marketplace.
“The Dubai event is yet another important milestone in our branding refresh for Boss and in turning customers into true fans for the brand,” said Hugo Boss chief executive officer Daniel Grieder.
Creating new fans was one of the biggest challenges facing Grieder when he took the helm of Hugo Boss last June. The company’s aging customer base stagnated its growth. But Boss started the new year with a bang, unveiling a campaign that flooded social media and global billboards with images of celebrities and influencers in neutral toned hoodies emblazoned with the brand’s new logo.
In a little over three weeks the signature Boss hoodie is nearly sold out and has become the best-selling single style in the history of the company. Net sales for Boss since the brand campaign went live on Jan. 26 increased by 248 percent (from 1.3 million euros to 3.3 million euros), the company revealed to WWD.
“There are brands today that are surviving and there are brands that are thriving. I can say in this moment, we are really, really thriving,” said Miah Sullivan, senior vice president of global marketing and communications for Hugo Boss.
Sullivan, who joined the company a month before Grieder, has been one of the key architects of the change. “We have moved fast. We’re really pushing the gas, creating a lot of momentum and brand heat with the relaunch,” she said.
The strategy to appeal to younger consumers actually goes back to the brand’s heritage, said Sullivan. “Hugo Boss has always been the brand for successful people. But in today’s world success is defined in a different way. It doesn’t mean being the manager anymore. It means writing your own story. A ‘boss’ is a person who leads a self-determined life, by your own rules and finding your own way.”
To reflect the modern definition of a boss, it was critical to emotionalize the brand, said Sullivan. They turned to content creators to develop authentic messaging. “If you are going to be a marketer today you always have to be learning. For example, we are working with a 17-year-old TikTok genius in Miami who lives at home with his parents. We have a proxy photographer for him here in Dubai who he is giving direction on what to shoot so he can create our social 3D content.”
The social media-first approach means working in new ways. “At one point recently I was in bed in my pajamas in Germany taking a video call with six creators between the ages of 17 and 19 brainstorming ideas.”
Boss’ marketing budget increased from 6.5 percent of total turnover to 8 percent with the rebranding, but more importantly, said Sullivan, the way they allocate that has changed. “We are very clever in how we spend.”
For the hoodie campaign, Boss cast 200 of who Sullivan describes as “the biggest bosses in the world” to help them reach a new audience. Some are very recognized faces in fashion – like models Hailey Bieber and Kendall Jenner. However, one of the hottest young stars for the brand is TikTok sensation Khaby Lame. He first walked for Boss in Milan in September in a social media first show with Russell Athletic. At the time no fashion brand had ever collaborated with him. The event got 15.9 billion impressions on TikTok and over 33 million social media engagements.
“And to think just 15 months earlier Khaby had lost his job and was unemployed, making videos in his free time and now he is the most famous influencer on TikTok,” said Sullivan. “That’s the ultimate boss.
“Because we are measuring everything on social media we could see who consumers were responding to after the show, and then we immediately went into deals and negotiations for brand ambassadorships. Boss also signed Italian tennis champ Matteo Berrettini and German runner Alica Schmidt. We find these unicorns and they become part of the Boss family.”
The partnerships with ambassadors are full 360 approaches. Two capsule collections co-created with Lame are in the pipeline. He and his team also consult on social media content. Boss also debuted a tennis capsule collection co-designed with Berrettini earlier this year. Schmidt’s capsule collection will be out for fall 2022.
Taking a data-driven social media-first approach for Boss has been fruitful. “For our last show in September, five times what we spent came back within two months in revenue,” said Sullivan.
A critical part of their success, said Sullivan, was that they could pivot quickly. “Daniel Grieder has this philosophy of the ‘speed of trust’ so we are able to make quick decisions because we have the resources and permission to sign the contracts quickly once we see the data.
“Even our big event here in Dubai. It was only 20 days ago we decided to do this here. As marketers we used to be so rigid, it was all about planning and forecast and calendar. But since the pandemic hit we had to become fast, flexible and adaptable. You always have a plan, but because of COVID-19 you always have a backup and do what works and get the most out of it.”
Boss brought five different crews to Dubai to shoot. Etienne Russo did the fashion film that unveiled the collection, but simultaneously other crews were shooting social media content, which is slowly being rolled out on the brand’s channels and with collaborators.
For Sullivan, the sales numbers are one part of the measure of success. “The next step is to measure and monitor on how people feel about the brand. Are we moving from heads to hearts? Do they love the brand? We need to do more emotional side data tracking, rather than just the rational side.”
Boss will be rolling out a social series called “Monday Motivations” featuring messages from its brand ambassadors on Mondays. “Because if you’re going to be a boss, you have to take care of your mind,” said Sullivan.
Len Blavatnik agrees $4.3bn recapitalisation of DAZN
Deal will take sports streaming group debt free as it explores new markets
Billionaire investor Len Blavatnik has agreed a $4.3bn recapitalisation of sports streaming platform DAZN that will make the lossmaking company debt free as it targets new revenue streams in betting and non-fungible tokens.
Access Industries, founded and chaired by Blavatnik and which is DAZN’s main shareholder, is converting preference shares and retiring shareholder loans in exchange for $4.3bn of new shares in the streaming group.
The recapitalisation means that DAZN is debt free as of the end of 2021, the company said on Friday. Access is also investing a further $250mn, split equally between new ordinary and preference shares.
Often labelled the “Netflix of sports”, DAZN has committed billions of dollars to acquiring the rights to broadcast top-level football matches in Italy, Spain and Germany and high-profile boxing bouts. But it is expected to report further losses in its delayed 2020 accounts, according to a person close to the company.
London-based DAZN was hit hard by the pandemic in 2020, when live sports fixtures were postponed, prompting Blavatnik to consider a range of financing options, including an outright sale, the FT reported at the time, and it made job cuts later that year.
Kevin Mayer, the former TikTok and Disney executive who chairs the streaming company, said Blavatnik’s increased backing was a “strong vote of confidence in DAZN’s strategy, progress and future growth”.
Blavatnik’s backing comes after the collapse of DAZN’s bid to acquire BT Sport, which broadcasts Uefa Champions League and English Premier League football in the UK, with UK telecoms group BT in exclusive talks to form a joint venture with US media Group Discovery instead.
While those rights would have increased DAZN’s profile in the UK and reshaped the country’s sports broadcasting landscape, Mayer has said a deal would have been “uneconomical”.
DAZN said its revenues and subscriber numbers were growing “strongly” as it continues to acquire the rights to screen more sport. The group reported a net loss of more than $1.3bn in 2019, as it sought to compete with incumbent broadcasters such as ESPN and Sky.
DAZN previously signalled its intent to explore new revenue streams with last year’s hire of Shay Segev, former chief executive of gambling group Entain. He has since been named sole-chief executive of DAZN.
The company said on Friday that it would move forward with new technology-driven opportunities this year, including recreational betting, gaming, ecommerce and so-called non-fungible tokens.
Hermès/leather: even lux bag makers cannot hide from supply snags
The business is less stellar than peers but operating profit trumped analysts’ expectations
Hermès, the last of the big European luxury houses to report annual profits, spoiled the party. Its defining leather goods and saddlery division, which produces roughly half of turnover, took a tumble in the fourth quarter. Revenues dipped 5.4 per cent. Hermès blamed supply constraints.
There have been other signs that all is not well in the world of tanning and saddle stitching. LVMH and Chanel have both increased the price of handbags. In China the price of the locally dubbed “little mah-jong bag” reportedly rose by half as much again, unleashing complaints from outraged netizens.
Luxury leather goods companies are battling procurement issues just like your high street burger joint. Supplies of hides fell when restaurants, shuttered by lockdowns during the pandemic, reduced their consumption of beef. About 70 per cent of leather comes from cattle, and slaughtering fewer of them means fewer hides.
This winter, European abattoirs were processing about one-fifth fewer carcasses than is typical for the time of year. Tanners, reluctant to run machinery at low utilisation levels, add a further brake — as do shortages of processing chemicals used in the process.
Leather making is a highly globalised industry. Much of the trade relies on partially processed hides going from the US and Brazil to China. Higher freight costs and logistics delays have had an impact. Changing demand from other buyers — such as the automotive and aviation industries — has added to production volatility.
Yet investors who knocked 5.5 per cent off the price of Hermès’ shares in morning trade on Friday in Paris were surely overreacting. The business is less stellar than peers LVMH and Kering. But operating profit trumped analysts’ expectations.
This is an industry that cannot only bear sticker shock but turn it to an advantage, stimulating sales ahead of expected increases and adding to the cachet of goods. That owes more to marketing than it does to raw materials. After all, designer Stella McCartney’s vegan handbags can easily run into four figures without so much as a hint of leather.
Major airlines cancel hundreds of flights as Storm Eunice hits the UK, causing chaos for passengers
- Severe winds hit the UK on Friday, forcing airlines to cancel hundreds of flights.
- British Airways and EasyJet said they've cancelled a number of flights due to Storm Eunice.
- Many airports have scrubbed flights, including London's Heathrow Airport, which cancelled 100.
Airlines cancelled hundreds of flights traveling in and out of the UK as Storm Eunice brought severe winds to the country on Friday.
The Meteorological Office, the UK's national weather service, has issued red warnings across some southern coastal areas in the country. Gusts of wind may reach more than 90 miles per hour, which could damage buildings and trees, the agency said.
London Heathrow Airport scrapped more than 100 incoming and outbound flights globally on Friday morning. Meanwhile, London City Airport cancelled more than 50, according to flight tracker FlightAware.
London City Airport announced that all flights going out of the airport were cancelled until 4:30 p.m. Friday afternoon, The Telegraph reported.
At time of publication on Friday, EasyJet had cancelled 44 flights heading in and out of the UK because of the strong winds, an airline spokesperson told Insider.
British Airways (BA) has scrapped at least 80 flights in and out of London airports, The Independent reported.
BA told Insider in a statement that it's expecting "extreme weather conditions at airports" in the UK because of Storm Eunice, which will trigger "significant disruption."
"Safety is our number one priority, and we're cancelling a number of flights," BA said.
Airlines including Aer Lingus and Ryanair did not immediately respond to Insider's request for comment, which was made outside of normal US working hours.
Many train and ferry services have also been cancelled.
The UK's National Rail says on its website that there is major disruption to train journeys across the country and all services in Wales have been cancelled on Friday.
Ferries between Dover, UK, and Calais, France have been suspended because of Storm Eunice, according to ferry tracker Direct Ferries.
Lower Omicron Efficacy Delayed FDA Review on Pfizer Shot in Kids Under 5
Regulators and drugmaker opted to finish testing before weighing vaccine’s performance in that age group after early signs of weakness against the variant
U.S. health regulators delayed their review of Pfizer Inc.’s Covid-19 vaccine in children under 5 years old because the initial two-dose series so far wasn’t working well against the Omicron variant during testing, people familiar with the decision said.
An early look at data showed the vaccine to be effective against the Delta variant during testing while that was the dominant strain, but some vaccinated children developed Covid-19 after Omicron emerged, the people said.
So few study subjects, whether vaccinated or unvaccinated, developed Covid-19 during testing thus far that the small number of Omicron cases made the vaccine appear less effective in an early statistical analysis, the people said.
As more cases emerge, Pfizer’s shot might wind up providing stronger protection against Omicron, the people said, if the bulk of infections are in unvaccinated subjects.
Officials from the Food and Drug Administration and Pfizer agreed it would be better to wait for the additional cases, the people said. The extra time would let the agency assess the vaccine’s effectiveness as either two doses or three, they said. The FDA was going to make its decision by looking at whether the shot generated immune responses comparable with those seen in older people.
The delay will also allow regulators to see how a third dose performs, the people said. That additional dose is given at least two months after the second shot. The FDA hopes to have a decision on the vaccine this spring, the people said; Pfizer has said it expects study results in early April.
Yet researchers are counting on more cases just as the Omicron wave declines in many countries. That could make it difficult to get enough Covid-19 cases to determine efficacy quickly, potentially forcing researchers to rely on immune responses.
The decision to wait, which came days before the FDA was expected to issue its determination, angered some parents who were eager to vaccinate their young children and confused others unsure of what to do. It also prompted some health experts to criticize the FDA, saying it should have waited all along to avoid authorizing a medicine that didn’t generate a strong enough immune response.
The FDA had urged Pfizer to apply for authorization in children ages 6 months to 5 years old, though the company had been planning to wait for testing to finish.
The vaccine, from Pfizer and partner BioNTech SE, is in wide use among people 5 years and older. Younger children are the only group waiting for FDA clearance, and Pfizer has been testing a lower dose of its vaccine in that cohort.
The testing was taking two forms: For a faster assessment, the companies explored whether the shot produced the same level of immune response in the younger children as it did in older people. They were also looking to see how many young study subjects developed Covid-19, then analyzing the numbers of vaccinated and unvaccinated people who develop cases to determine the shot’s efficacy.
In a preliminary look at the data, researchers saw the vaccine was about 50% effective in the children when Delta was the predominant strain circulating, despite mixed results in whether the vaccine generated the desired immune response, the people said.
In children ages 6 months to 2 years, the shot generated an immune response comparable to that seen in young adults, but it didn’t do so in children ages 2 to 4 years, according to the companies. Independent vaccine experts say they don’t know why the vaccine performed poorly in some children, and the companies have declined to speculate.
One factor, the experts say, could be that children have less developed immune systems. The relatively small number of Covid-19 cases that have emerged in study subjects could also potentially skew results.
Some health experts point to the low dosage given to the young children as another possible factor. Pfizer and BioNTech are testing a 3-microgram dose in children under 5 years, one-tenth the dose given to older children and adults. Using a higher dose risked more adverse effects such as sore arms and fever, one of the people familiar with the vaccine’s development said.
Pfizer had studied a higher dose of 10 micrograms in a small group of children in an early study last year, but the drugmaker said it found too many of the subjects experienced side effects such as fevers and chills.
Testing has found the 3-microgram doses have a good safety profile, Pfizer has said. The companies have said they hadn’t observed any serious safety concerns during the testing.
The continuing study is evaluating a third dose at the same 3-microgram dose. The extra shot has produced a strong immune response in testing, one of the people said.
Kering’s Game Plan for 2022
With flagship brand Gucci turning a corner and the French group’s smaller brands still surging ahead, chairman François-Henri Pinault laid out a roadmap for Kering’s next chapter.
PARIS — Kering marked a milestone in its rebound from the coronavirus crisis Thursday, reporting that its anchor brand Gucci was now growing by double-digits above 2019′s pre-pandemic levels.
The past two years had made for rough going at the Italian fashion giant, whose dependence on travel retail and discount-prone wholesalers was laid bare during the pandemic. So the news was a key signal to markets that the French group could still deliver on its promise of a “soft landing” at Gucci after years of explosive growth under designer Alessandro Michele and chief executive Marco Bizzarri.
Other brands in Kering’s stable continued to surge ahead as the group reported sales and profit: Saint Laurent’s retail revenues rose by as much as 61 percent over 2019 levels during the fourth quarter, while operating margins climbed to a record 28.3 percent for the year. Bottega Veneta and the group’s ‘Other Houses’ division, which includes Balenciaga and Alexander McQueen, also reported rapid growth.
For the year, Kering’s revenue rose 35 percent year-on-year to €17.7 billion ($20 billion), up 13 percent compared to 2019′s pre-pandemic levels. “All of our houses are stronger than ever before,” chairman and chief executive François-Henri Pinault said.
The group’s two-year growth is three times faster than the wider market for personal luxury goods, which grew 4 percent over 2019 levels last year according to consultancy Bain. But it still lags far behind its rival conglomerate LVMH, whose fashion and leather goods division closed the year up by 42 percent over 2019, powered by Louis Vuitton and Dior.
For Kering, a group that has long positioned itself as a fast-growing challenger to LVMH and Swiss group Richemont, there is still work to do. In a series of meetings with investors, analysts and the press Thursday, Pinault laid out a game plan for Kering’s next chapter.
No More Online Wholesale
The luxury groups that have been most resilient since the pandemic have been those who rely little, or not at all, on third-party retailers for distribution, as the pandemic made direct relationships with clients, omni-channel services, consistent pricing and close monitoring of stocks even more critical than ever.
Kering has taken notice, and is moving to more radically slash its exposure to wholesale, accelerating a focus on retail that began before the pandemic. At Gucci, wholesale revenues remain down 39 percent since 2019 even as sales bounce back, thanks in part to a retreat from US department stores that is likely to continue in the year to come.
Gucci may still be present in some department stores, but via concessions controlled by the brand rather than wholesale. Kering’s fast-growing smaller units like Alexander McQueen and Balenciaga are also ramping up their focus on retail stores and concessions.
The acceleration away from third-party sellers will be even more keenly felt in e-commerce. “We’re stopping all online wholesale for our brands,” Pinault told reporters, citing frequent discounting by e-tailers. Going forward, Kering wants to sell only on its brand’s own websites or through “e-concessions” on multi-brand sites. (The term refers to deals that allow a label’s products to appear on an e-tailer’s website while still retaining control over stocks, pricing and product presentation).
‘Sun Belt’ Expansion in the US
Kering plans to review its store footprint in the United States, which was the luxury industry’s fastest-growing market last year. Pinault was fresh off a trip with top managers to hunt for potential new locations in cities including Atlanta, Charlotte, Nashville and Austin: “Sun Belt” hubs where the consumer economy has sharply accelerated (in part due to families and companies relocating to warmer, less expensive climes since the pandemic), but which remain comparatively underserved by luxury boutiques.
“These cities have changed structurally, it’s not just a spike,” Pinault said.
But even if the money is there, the infrastructure required for luxury retail isn’t: “There’s still some work to do to convince the landlords to get the malls back at the right level,” he said. The company declined to say exactly how many new stores it hoped to open in the US.
Timeless Style, Iconic Products
During its boom years from 2016 to 2019, Kering became known for its bold, designer-led revamps at Gucci, Balenciaga and Bottega Veneta. Pinault often cited the group’s strategy of rolling out its creative directors’ visions to every part of its brands — from the runway to commercial products, campaigns and store concepts — as driving growth.
But since the pandemic, luxury shoppers have flocked to blue-chip items seen as never going out of style, like Chanel flap handbags and Hermès Birkins, while more seasonal propositions lagged behind.
Kering now seems to be tweaking its mix between novel creative concepts and building greater awareness of classic products and iconic codes at each of its houses. At the very least, Pinault is calling more attention to the latter part of the equation.
“Gucci isn’t just about creative seasonal introductions,” he told one analyst. “Gucci is about codes, craftsmanship, values and iconic lines.”
The company cited Balenciaga — which revived its haute couture activity last year, as well as issuing a collaboration with “The Simpsons” — as exemplary of the group’s desired approach to balance heritage and innovation.
“Designers are still very important. They are the ones who animate the iconic codes,” Pinault said. “But you need a balance between creativity and timelessness. It’s about being able to play with both.”
Expanding in Menswear
Kering said it saw high potential for its brands to increase the share of men’s products in their business.
That the menswear market was seen as under-penetrated for the group might come as a surprise, as it’s been credited with welcoming a new generation of men to the luxury market with items like Saint Laurent low-top sneakers and Gucci monogram cross-bodies and bucket hats. In the 2010s, Kering’s brands were among the first to ease luxury’s reliance on formal shoes, tailoring and neckties for men.
Now, Gucci and Saint Laurent are set to renew their efforts in the category after focusing more on womenswear in recent years, Pinault says.
An even split between men and women, such as is currently the case at Balenciaga, has traditionally been seen as undesirable, indicating a weak business in women. But times have changed, and the importance of men to the fashion business continues to grow.
A 50-50 split can be “perfectly healthy” Pinault said. For the other brands, “That isn’t the target; the split will be what it will be. But we believe at Gucci there’s room for menswear to increase its share significantly.”
Moving Upmarket
Luxury brands including Chanel and Louis Vuitton have raised prices repeatedly, and dramatically, since the pandemic. Kering has raised prices too — including twice at Gucci last year — but the hikes haven’t been as big.
Price hikes to offset increased materials and transportation costs are likely to continue in 2022, though Kering wouldn’t say by how much. The biggest increases aren’t likely to come from like-for-like increases on individual products, the company said, but from gradually ramping up the focus on more sophisticated, high-value items in each brand’s product mix.
Kering seems to be mindful of not letting its brands’ positioning from slipping too far behind other luxury names, all while remaining cautious about the risks of pivoting to top-end clients too quickly. It’s pushing upward, as with the introduction of haute couture at Balenciaga and high jewellery at Gucci, but gradually. “You have to build legitimacy in these categories,” Pinault said.
Acquisitions Top of Mind
Pinault said January’s trading had been in line with the strong growth during 2021′s fourth quarter, and that he was optimistic for strong growth throughout the year. Still, 2022 could also see Kering finally pull the trigger on one of the transformational mergers and acquisitions its been reportedly eyeing for years.
The group remains heavily dependent on Gucci for the bulk of shares and profits. And while Kering has been linked to, and occasionally acknowledged, potential deals for Richemont, Versace and Moncler, and Prada, no major deal has materialised since its 2007 acquisition of Puma (which it has since spun off).
Many luxury targets face significant challenges in terms of growth and brand appeal. Almost all of them have a controlling shareholder who would need to be convinced to sell, bar one exception: Burberry. The British label — whose CEO recently departed for Italian shoemaker Salvatore Ferragamo with the brand’s turnaround still underway — is always for sale.
Pinault said Kering would “very actively look at potential acquisitions,” this year, but that the company needed to remain “patient, opportunistic, and most importantly very lucid.”
“We’re always monitoring what’s available and what makes sense for us,” he said.