Kering looks to final spin off to become “pure play” luxury company
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Kering looks to final spin off to become “pure play” luxury company

French fashion giant Kering is looking to become a traditional luxury-only company, whose brands include names like Gucci and Yves Saint Laurent. As a result, they announced earlier this year that they would be spinning off German sportswear brand Puma. Now, they want to get rid of the final “non-traditional-luxury” brand in their portfolio: skater brand Volcom.

Kering’s share price surged by 6% over the last week

graph 1304 kering

SOURCE: Yahoo Finance

Kering acquired Volcom in 2011 for $608 million, but has now decided that it wants to focus on the purely high-end elements in its portfolio, like Balenciaga. As a result, it is currently actively looking for a buyer. In a statement, the company said: "In line with Kering's strategy to focus entirely on the development of its luxury homes, Volcom is no longer a core brand, so Kering has initiated a sale process."

In totally unrelated news, it announced earlier this month that it would be selling its 50% stake in Stella McCartney back to the brand’s eponymous owner.

Kering’s focus on core luxury comes at, arguably, a great time. LVMH kicked off luxury earnings season in April with a positive set of results that are being interpreted as a bellwether for the industry. Likewise, Kering is capitalizing on one of the major drivers behind the luxury recovery (Chinese demand) with a new JD.com flagship store.

Disclosure

Dominion holds Kering in its Global Trends Luxury Fund.


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