Pinault Holds Barred

Francois-Henri Pinault
About 15 years ago, Pinault eliminated the mass retail and sports brands that helped build his father’s fortune, instead homing in on vertically integrated pure luxury. Photo: Marlene Awaad/Bloomberg/Getty Images
Lauren Sherman
July 1, 2024

In Paris, everyone is talking about succession at LVMH, but I came away from my recent trip to the center of the fashion world thinking as much about the future of Kering. The reality is that a generational changeover may happen at LVMH’s closest rival long before Bernard Arnault finally gives it up to the kids. After all, it’s been a year since Kering C.E.O. and chairman François-Henri Pinault accepted the advice of activist investors and began reorganizing his heirloom, which is seeing its status as the only formidable challenger to LVMH threatened by investors, consumers, and internal forces alike.

About 15 years ago, Kering embarked on what was an incredibly effective pruning of a family business. Pinault eliminated the mass retail and sports brands that helped build his father’s fortune, but had since become a distraction, instead homing in on vertically integrated pure luxury, which was growing exponentially. The move was rewarded by investors, and Kering’s market capitalization peaked at $115 billion in mid-August 2021. Today, in the long aftermath of Alessandro Michele’s exit from Gucci and the Balenciaga crisis and the cooling of the Chinese economy and post-ZIRP U.S. market, the company’s valuation has decreased to $41 billion—a wee bit more than a tenth of LVMH’s $382 billion market cap.