Kering, the luxury fashion and lifestyle conglomerate once dubbed the ‘king of luxury’ by the Financial Times, now finds itself in unfamiliar territory. As principal concerns and overall diminished earnings hangover the group, investors are rightly worried about the future of this once-titanic force in the fashion industry. In this article, we take a deep dive into the pressing concerns that are impacting the Paris-based luxury giant and what the future holds in store for the fashion juggernaut.
1) A Closer Look at Kering’s Struggles
One of the world’s largest luxury groups is Kering, a French multinational luxury goods conglomerate. However, much like other big luxury brands, they have not been immune to the effects of the coronavirus, leading to a drastic re-evaluation of their operations. With a decrease in revenue, the company has had to adjust.
The effects of the pandemic have been felt far and wide by Kering:
- Closures of Stores Around the Globe. Luxury Branded stores have been forced to close due to the pandemic, leading to monetary losses in the hundreds of thousands.
- A Direct Hit on the Bottom Line. Kering’s largest bottom line drop was in their second quarter, where their overall revenue fell by 37%.
- Shift to Online Platforms. The company has had to shift their focus to online sales which have been largely successful, however it’s not enough to make up for the losses of store sales.
These challenges have been further compounded by the costs of restructuring, which has put even further financial strain on the already weakened luxury group. In order to remain competitive, Kering needs to make some major changes – not only to their operations but their marketing strategy as well.
2) Unpacking Kering’s Principal Concerns
Kering, an international luxury conglomerate, recently revealed their principal concerns for the foreseeable future. With a passion for sustainability and innovation, Kering is constantly striving to establish itself as an industry leader in environmental impact and corporate responsibility. Let’s take a look at Kering’s two major principles of sustainability and the role they play in the luxury sector.
- Environmental Conservation: Kering is promoting environmental conservation through their initiatives to monitor both their short and long-term feasibility. This includes their intentions to conserve and invest in resources in order to protect and preserve the environment for future generations.
- Brand Engagement: A major priority for Kering is preserving the integrity of their luxury brands. This is reached through engaging with the corporate responsibility of their brands, manufacturing processes, and communitarian initiatives. Furthermore, Kering aims to protect the cultural and social expression of their brands.
Kering’s mission reflects the desire for success while limiting the impact on the environment and society. By ensuring that they are focused on sustainability, Kering has become an example for other players in the luxury industry to model their practices after.
3) The Impact on Kering’s Profitability
Kering’s ongoing sustainability practices have had a significant positive impact on their profitability. By reducing wasteful consumption and using resources more efficiently, the company has been able to save a significant amount of money.
For example, Kering has invested in better energy management systems to reduce energy costs, as well as to save on materials, packaging, and fabrics. Likewise, they put an emphasis on the reuse of fabrics and materials. Additionally, they have chosen more energy-efficient production processes, as well as improved logistics to reduce their environmental footprint.
- Behavioral change: Kering has taken a number of initiatives to involve and transform its customers’ behaviors. For instance, through their Fashion Positive commitments, the company endeavors to encourage responsibility and sustainability.
- Reducing carbon footprint: Kering has taken numerous steps to reduce its carbon footprint, including reducing its Climate Change strategy, eliminating the use of hazardous substances, eliminating single-use plastics, and powering its production sites with renewable energy.
These efforts are mirrored in the company’s financial performance, where their efforts have resulted in increased profits and overall efficiency. This increased efficiency has let the company reinvest in projects that make it even more socially and environmentally responsible. It’s proof that sustainability can be good for the environment and for a company’s bottom line.
4) Investing in Kering for the Long-Term
If you’re looking for a stable and solid long-term investment, Kering should be your go-to choice. A global leader in apparel and accessories, Kering has a proven track record of delivering consistent returns throughout its extensive history. Here are some of the reasons why investing in Kering is well worth your consideration:
- Leadership: Kering is a well-respected leader in the apparel and accessories industry, enjoying a proven and loyal customer base.
- Wide Range of Brands: Kering encompasses a portfolio of leading fashion and luxury brands, offering a greater diversity of opportunities for long-term investments.
- Financial Stability: Kering’s revenue consistently grows year on year, producing steady returns on investments for years to come.
Not to mention, Kering also offers investors strong customer loyalty and long-term rewards, thanks to its tireless commitment to fashion innovation and quality. Whether you’re based in the fashion capital of Paris or its international outposts, investing in Kering could be one of the best decisions you can make for your future.
As its performance this year clearly highlights, Kering faces numerous challenges as it continues to navigate through a complex economic landscape. Despite this, the firm has continued to show resilience and innovation in the face of adversity and remains committed to understanding emerging market trends, providing vital products, and delivering results. It may yet be that Kering’s commitment to long-term plans and steady-handed execution will deliver the results the group seeks.
