Kering, Stella McCartney in Talks to End Partnership
After 17 years, the French luxury conglomerate has recently held discussions to sell its 50 percent share of the label to Ms. McCartney.
PARIS, France — French luxury group Kering is in discussions to sell its 50 percent share of Stella McCartney back to the namesake designer, according to a source familiar with the discussions. The announcement, originally slated for early January, has been pushed back indefinitely, the source says.
"Ms Stella McCartney and Kering have been operating and growing the Stella McCartney brand since 2001 as a 50/50 joint venture. As often between stakeholders there are regular discussions about the future of the partnership," a spokesperson for Kering said in a statement provided exclusively to BoF. "Any significant change to the current relationship would naturally be made public at the appropriate time.” When approached for comment, a spokesperson said Stella McCartney had nothing further to add to Kering's statement.
It is understood that the joint venture agreement enables McCartney to buy back the shares owned by Kering, and that over the 17 years of the partnership, a split has been contemplated from time to time. Now, the discussions are said to have a more serious tenor and while no final decision has been made, an announcement could be forthcoming in the next three-to-four months. However, unravelling the partnership would take significantly more time than that given the degree of integration between Stella McCartney the company and its parent organisation.
Stella McCartney first launched as a joint venture with the Gucci Group (once a subsidiary of what is now known as Kering), at the time run by chief executive Domenico De Sole and Tom Ford, who designed both Gucci and Yves Saint Laurent. (McCartney joined from Chloé after a short but well-received stint as creative director.) Alexander McQueen joined the group in 2000.
Over the next two decades, McCartney and Kering built a global brand, driven not only by the designer’s exuberant sportswear but also by her commitment to animal-free fashion. McCartney’s faux-fur and faux-leather apparel and accessories helped to elevate the materials in the eyes of the consumer, serving as an example for other brands and a resource for Kering’s entire portfolio, which now also includes Balenciaga, Christopher Kane and Brioni. In 2016, Stella McCartney published its first environmental profit-and-loss account.
Kering does not break out the revenues of its smaller houses, although in 2015, market sources estimated that Stella McCartney’s annual global sales were somewhere between $150 million and $200 million. However, the annual retail value of Stella McCartney products is likely significantly more thanks to branded collaborations with Procter & Gamble for beauty (including a hit fragrance business), Adidas for activewear and Bendon for lingerie. Her collection with Adidas, first launched in 2004, has become a brand in itself. McCartney then launched menswear in 2016.
The potential split comes at a time when Kering is streamlining its portfolio and focusing its attention on blockbuster brands including Gucci, Saint Laurent and Balenciaga. In early January, the group announced that it would spin off German sportswear brand Puma, inching the parent company further towards becoming a pure luxury player. In the fiscal year ending December 31, 2016, consolidated revenues were €12.4 billion (about $15.2 billion at current exchange), up 6.9 percent on a reported basis. Sales within the luxury group, which excludes Puma, Cobra and skate brand Volcom, were up 7.7 percent.