Luxury shake-up: Kering, LVMH cut assets amid falling Asia sales

What happened On January 30, Kering announced the finalization of the sale of 100% of The Mall Luxury Outlets to Simon, a world-leading operator of shopping, dining, and entertainment assets. In a statement, the parent company of Gucci said it is “aiming at gradually concentrating its outlet distribution to a limited number of exclusive venues.” The divestment of this non-core asset will generate net proceeds of approximately 350 million euros ($361 million). Kering isn’t the only luxury conglomerate offloading assets. Last week, rival LVMH revealed it was selling its 49% stake in Stella McCartney’s loss-making eponymous label, which the group had acquired in 2019. McCartney will continue to advise LVMH as the team’s global ambassador on sustainability. This move comes after LVMH sold its majority stake in luxury streetwear brand Off-White in September last year, as well as its majority stake in Cruise Line Holdings, a cruise retail business, in December 2023. The Jing Take Luxury conglomerates are cleaning up their portfolios as global appetite for high-end goods wanes. In Q3 2024, Kering reported that group revenue was down 15% on a reported basis to 3.8 billion euros ($3.9 billion), with operating income expected to drop 47% YoY for full-year 2024. Meanwhile, LVMH, owner of Louis Vuitton and Dior, reported that revenue for fiscal 2024 fell 2% on a reported basis while operating income fell 14%. This deceleration was particularly pronounced in China. Asia-Pacific sales at Kering declined 30% in the three months ending September 30, 2024. Notably, “a third of spending by the Chinese cluster took place outside of its home market,” with revenue overall from this demographic “down close to 35%,” Kering CFO Armelle Poulou said on the earnings call. As such, luxury giants are recalibrating their business strategies. In addition to selling “non-core” assets like The Mall Luxury Outlets, Kering plans to consolidate its Greater China footprint and upgrade stores in 2025. “The idea is to close the smaller stores or the ones that are not in the best location and probably extend the size of some of the best stores in order to get the right footprint,” Poulou explained on the earnings call, noting that many stores in Tier 1 cities are located close to one another. In 2025, brands including Gucci and Bottega Veneta are reportedly set to exit major Shanghai shopping malls such as Reel Shanghai and New World Daimaru, while Louis Vuitton has delayed the opening of its flagship store in Beijing’s Sanlitun Taikoo Li, originally scheduled for H1 2024. This doesn’t mean brands are giving up on the market. Rather, as the artificial luxury boost from Covid-19 cools, they’re becoming more strategic about where and how they expand. The opening of Balenciaga’s largest store in China in December last year underscores the importance of targeted offline retail investments. With China’s luxury market expected to stay flat this year, the luxury houses best positioned to weather the slump are those with strong product offerings — ones that justify the continual price hikes — and immersive, experiential experiences that cater to the evolving tastes of local shoppers. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Sign of the times? LVMH, Kering sell assets, shut stores

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Sign of the times? LVMH, Kering sell assets, shut stores