Kering: A breath of fresh air at $837 million

Luxury goods giant Kering has teamed up with Ardian, a major player in private equity, in a strategic real estate deal worth 837 million euros. A welcome move against a backdrop of declining performance for the Group.

A real-estate joint venture in the heart of luxury avenues

As part of this collaboration, Kering has transferred three exceptional properties to a new structure co-owned with Ardian, in which the latter holds a 60% majority stake, compared with 40% for Kering. The properties concerned include:

• The Hôtel de Nocé, located at the prestigious 26, place Vendôme in Paris, an emblematic location for luxury houses.
• Two strategic buildings at 35-37 and 56 avenue Montaigne, two of the capital’s leading addresses for luxury brands.

In exchange, Kering receives 837 million euros, strengthening its cash position at a key moment for the Group.

A difficult environment for Kering

This decision comes at a time when Kering is going through a difficult period. After several years of growth, the Group is experiencing a significant decline in its financial performance:

• In the first nine months of 2024, Kering’s sales fell by 12% to 12.8 billion euros.
• In particular, sales were affected by a slowdown in China and the declining performance of certain flagship brands such as Gucci, which accounts for a significant proportion of its revenues.

Faced with these difficulties, Kering is adopting a strategy aimed at optimizing its real estate assets while consolidating its finances.

A global real estate strategy for Kering

This transaction also comes at a time when Kering is actively investing in strategic real estate locations to strengthen its global presence. In 2024, the group acquired two prestigious properties:

• A building on New York’s Fifth Avenue, a must-see address for luxury retail.
• A property located on Via Montenapoleone in Milan, currently the most expensive shopping street in the world.

These investments demonstrate Kering’s ambition to consolidate its position in strategic markets despite a slowdown in business.

A win-win partnership with Ardian

The involvement of Ardian, a major player in European private equity, brings management capabilities and real estate development expertise to this joint venture. For Kering, this partnership frees up financial resources while retaining a stake in key assets.

A manoeuvre to bounce back

This operation, though tactical, reflects the luxury giant’s efforts to navigate through a period of transition and maintain its competitiveness in the luxury industry. With these 837 million euros, the group has a breath of fresh air to support its brands and potentially reinvest in strategic projects.

Next up: Kering’s annual results for 2024, which will give a clearer picture of the direction the Group is taking after this strategic maneuver.