Kering’s beauty revolution

After Kering eyewear, the group led by François-Henri Pinault will internalize cosmetics. Following the example of compatriot Lvmh, which already directly manages the cosmetics segments through its perfumes & cosmetics business unit, and as well as other industry big names such as Dolce&Gabbana, the French conglomerate has officially started Kering beauté. The group appointed an Italian manager to lead the newly formed division, another one entering the roster of Italian homegrown talents at the top of one of the fashion & luxury giants.

With more than 25 years of experience in the beauty industry within large groups such as L’Oréal Paris, Chanel parfums beauté, and Estée Lauder, Raffaella Cornaggia will serve as ceo in Paris, where she will report to Kering’s chief executive Jean-François Palus. She will also be a member of the executive committee. Supported by a team of seasoned industry professionals, Cornaggia will help develop the beauty expertise of brands such as Bottega Veneta, Balenciaga, Alexander McQueen, Pomellato and Qeelin, enabling the group to support its maisons in strengthening this business area, «enhancing the specific identity of each brand while respecting their respective strategies and positioning», the company specified in an official note.

For the time being, the new strategy will not include Saint Laurent’s Ysl beauté and Gucci beauty labels, which will remain under license to L’Oréal Paris and Coty, respectively. Notably, Coty will still keep the florentine maison under contract, according to analysts at Rbc capital markets, «for at least five years». However, according to experts at Royal bank of Canada (Rbc), this new division should give Kering «the time to build and develop these businesses internally with smaller brands» before becoming, in the long term, «an alternative to take back control of Gucci’s perfumes and cosmetics». However, in the short term, according to Rbc, the effect on the group’s earnings «is unlikely to be significant». The broker therefore reaffirmed its buy rating on Kering’s stock and its target price of 625 euros.

«We are developing this new know-how within the group to enable our brands to reach their full potential in this category», ceo Palus concluded. However, the announcement did not stir up Kering’s stock, which was slightly below par and then closed the day at 597.7 euros (+0.57%) during the last session in Paris. (all rights reserved)