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PPR Acquires 51 Percent of Christopher Kane

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PPR Acquires 51 Percent of Christopher Kane

Post by xyz on Sun Jan 20, 2013 3:15 am

PPR Buys Majority Stake In Christopher Kane

By NADYA MASIDLOVER

PARIS—PPR SA PP.FR +1.24% said Tuesday it has acquired a majority stake in designer label Christopher Kane, as the French luxury giant maintains its fashion edge by buying into one of London's most sought after names.

The acquisition of a 51% stake in the Christopher Kane label highlights PPR's long-established strategy of investing in smaller high-end brands such as Stella McCartney and Alexander McQueen and nurturing their growth.

"This new partnership with Christopher Kane is a testament to our desire to work with and support new creative talent," said Alexis Babeau, managing director of PPR's luxury division on a call with journalists.

PPR, the owner of luxury houses such as Gucci and Bottega Veneta as well as Puma sportswear, didn't disclose the purchase price nor the annual revenue of the Christopher Kane brand, but said that the company was currently profitable.

The 30 year-old Scottish designer, who runs the business with his sister Tammy Kane, is one of the British fashion scene's rising stars. Over the past seven years, his collaborations have been as diverging as they have been high profile, earning him notoriety both in fashion's elite circles and among mainstream shoppers.

Since graduating from Central St. Martin's College in London and setting up his own brand in 2006, Mr. Kane has consulted for fashion icon Donatella Versace, designed a capsule collection for high-street chain Topshop and worked with the crystal maker Swarovski and the Shiseido 4911.TO +0.71% cosmetics brand.

Last year, Mr. Kane was one of three nominees for the British Fashion Awards designer of the year, along with PPR's Stella McCartney, who won the esteemed accolade.

"PPR have an incredible reputation for building some of the very best luxury brands in the world," said Christopher Kane in a statement Tuesday.

In PPR's luxury portfolio, the young talent will join other British names such as Mr. McQueen and Ms. McCartney, whose development has been supported by the company for over a decade.

PPR's Gucci unit purchased a 51% stake in Alexander McQueen in 2000, while Ms. McCartney built her label from scratch starting from 2001 with the support of the company. Alexander McQueen's sales have been multiplied by 12 since its acquisition, said Mr. Babeau Tuesday, adding that both brands—whose figures aren't broken down in the company's trading updates—now have an annual revenue of over €100 million ($133.8 billion) each.

Mr. Babeau said that PPR's "intent is to replicate that success" with Christopher Kane. The London-based company currently employs 26 people and distributes its garments through around 200 wholesale outlets, but it has yet to have a presence in direct retail. For PPR, the opening of a store for the brand—most likely in London in 2014—will be "one of [its] first quests," said Mr. Babeau. The French company also has plans for Christopher Kane to develop beyond Europe—where it does close to 50% of its business—and the U.S., expanding in Asia, and widen its offer into leather goods and accessories.

The move fits well the luxury-to-lifestyle group's strategy to buy smaller brands with a strong growth potential as it seeks to bolster its high-end goods division. Last month, PPR announced the acquisition of Chinese fine-jewelry maker Qeelin Ltd.

Over the past decade, PPR has shifted out of its low-growth retail chain businesses into high-profile brands. Last year, the company plowed ahead with the disposal of its remaining retail assets, Redcats and Fnac, which are in the process of being sold and spun-off respectively.

http://online.wsj.com/article/SB10001424127887324235104578243391383861444.html#

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Re: PPR Acquires 51 Percent of Christopher Kane

Post by xyz on Sun Jan 20, 2013 6:37 am

INFO SOURCE: BOF

16 January, 2013 | by Imran Amed, Editor

What to Make of PPR’s Christopher Kane Investment

LONDON, United Kingdom — Back in 2006, when I first spoke with experts and investors from across the fashion industry about backing emerging fashion businesses, there was a lot of enthusiasm, but very little action. Many looked at these kinds of deals, but nobody actually put their money down. In this context, French luxury conglomerate PPR’s announcement, earlier today, that it has acquired a 51 percent stake in emerging London label Christopher Kane is particularly significant. Indeed, it’s been a very long time since a major luxury group has taken a majority stake in a young designer fashion brand.

In 2005, roughly five years after PPR’s much-hyped investments in Stella McCartney and Alexander McQueen, the general consensus amongst the fashion cognoscenti was that these investments were underperforming. McQueen and McCartney had only a few stores each in the world’s main fashion capitals and were a long way from being businesses that could contribute to the bottom line of their parent company. They required huge capital injections to grow — and their future was uncertain. And, as if to further bolster the argument that building fashion brands from the ground up wasn’t something large conglomerates were particularly good at, PPR rival LVMH’s only from-scratch fashion investment — in Christian Lacroix — resulted in the brand’s sale after more than 15 years of poor results.

But fast forward a few more years and today, both Stella McCartney and Alexander McQueen have grown into medium-sized businesses with over €100 million in annual revenue each by pursuing business models that fit, respectively, with their unique brand DNAs.

McCartney has taken her name and created what one fashion expert described to me as a business that could one day become the “Calvin Klein of Europe,” a lifestyle brand with significant licensing revenue across multiple product segments. Regular readers of BoF will recall that Calvin Klein chief executive Tom Murry acknowledged to me that their core fashion business is “not a business that contributes to the bottom line and it probably never will be.” But that’s okay, as the licensing business contributes more than enough and it’s one model that works.

As for McQueen, a company that many thought was on the very edge of survival after the unexpected death of its founder, this business, too, has found its feet financially, while quick decision making by PPR executives and the impressive work of creative director Sarah Burton have ensured the preservation of the brand’s DNA and enabled the company’s expansion into new businesses such as McQ.

The common lesson here is that it can take many, many years for a young designer fashion brand to find its footing. The fact is, it’s hard to scale a fashion business from virtually zero. Emerging fashion brands still need to define and articulate their DNA, establish the core products that the business will be built upon and put into place solid teams and structures before they can expand. The best fashion investors recognise this and are willing to wait up to ten years to see their investments bear fruit.

This is why today’s announcement is so significant. While PPR must be pleased with its new brand asset, the biggest winner is Christopher Kane, who has found a partner who believes in him and his talent, and has the patience to allow his brand to develop and discover the path that works for him. In the fast-paced, high-stakes world of global fashion, this kind of investment from one of the world’s leading luxury groups is the holy grail — and Kane is highly deserving of the endorsement.

But make no mistake. There is a lot to be done. While Kane has a seemingly endless well of creativity to draw upon, he will need to be paired with the right commercial team to establish a solid underlying business model for revenue growth, merchandise his collection for profitability (a few core items that can be carried over each season) and build a successful retail model that includes e-commerce.

But first, there’s that one small matter of a website. Today, www.christopherkane.com takes you to a blog called “the ramblings of a software guru.” I’ve joked about this with Christopher in the past. Perhaps now, with the time, space and team made possible by the PPR investment, Mr Kane will focus some attention on his digital presence too.

Imran Amed is founder and editor-in-chief of The Business of Fashion

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