By Alfred Bouchaud
Kering is a luxury firm specialised in clothing and headquartered in France. The company, founded in 1963 as Pinault S.A., has been part of the CAC 40 index since 1995 and became Kering in 2013. It is currently the second-best luxury company in terms of market share, ranking behind the French multinational LVMH. Kering owes luxury good brands including Gucci (the most profitable subsidiary of the group), Yves Saint Laurent, Balenciaga, Alexander McQueen, Bottega Veneta, Boucheron, Brioni and Pomellato.
According to François-Henri Pinault, Kering CEO, the prosperous activity of his group as well as the good results of luxury firms in general can be explained by the economic progress of new markets such as Asia, which contributed to boost the number of potential consumers. The success of its luxury brands led Kering to sell Puma in 2018 even though the German company has been benefiting from good financial results, especially thanks to stars such as Rihanna who tremendously developed Puma’s image on social networks. This financial operation shows Kering’s effort to focus on luxury at the expense of the sportswear field.
However, the firm is suspected of resorting to tax evasion. Indeed, judges investigate the way its Swiss-based logistic platform called Luxury Goods International (LGI) is managed. LGI could be used to evade taxes as regards Kering’s brands like Gucci or Yves Saint Laurent. Moreover, Kering would probably have negotiated a more attractive tax rate in Switzerland than in France or Italy.
Kering is a thriving group which reaps the benefits of the luxury market growth around the world. However, its performance is slightly sullied by taxation issues and LVMH remains by far the worldwide leader in the luxury industry as exemplified by its turnover which reached €42,6 billion in 2017 while the one of Kering represented €15.5 billion.