Kering Sets Out EUR5 Billion Top-Line Goal for Yves Saint Laurent
June 09 2022 - 2:42AM
Dow Jones News
By Joshua Kirby
Kering wants to see its second-biggest brand Yves Saint Laurent
reach 5 billion euros ($5.36 billion) in sales and boost its
profitability in the medium term by growing in underpenetrated
consumer markets and focusing on retail over wholesale, the French
luxury-goods group said at a capital-markets event Wednesday.
The ambition entails close to a doubling of the sales the brand
made in 2021, namely EUR2.52 billion of the group's total EUR17.66
billion. Main brand Gucci contributes more than half of Kering's
total revenue and profit.
Kering also aims for YSL to reach and sustain an operating
margin of 33% in the medium term, it said. Last year, the group
notched a margin of 28.2%, a record level though still some way
short of Gucci's 38.2% margin.
The next milestones in YSL's progress will be passing EUR3
billion in sales and attaining a 30% margin, Kering said.
In order to reach these goals, the brand will consolidate its
existing demographics, with a focus on younger consumers in the
millennial and Gen-Z generations, while appealing to others, Kering
said. It will also grow its business with local consumers, who make
up a far bigger proportion of sales than tourists, the group
said.
YSL will consolidate its leading product category, leather
goods, while also looking to grow in shoes and ready-to-wear and by
attracting more male consumers, who in 2021 made up only around a
quarter of the brand's customers, Kering said.
The brand will also look to further rationalize its wholesale
sales in favor of retail, following in the footsteps of Gucci. Last
year, YSL started streamlining wholesale, which grew only 6% from
the prepandemic period, compared with a 35% rise in sales from
directly operated stores. Omnichannel expansion, including growth
in online, will be part of this strategy, Kering said.
Annual capital expenditure for the brand is targeted at 4%-5% of
revenue, and will entail an expansion of the store network to reach
some 300-350 in total, including significant expansion of the store
network in the U.S. by next year, the company said.
Kering has previously underscored the potential of YSL, which
was probably the world's fastest-growing luxury brand last year,
Chief Executive Francois-Henri Pinault said following 2021 results
earlier this year. Analysts at the time noted the brand was
Kering's star performer over the year, and has much potential in
China, as well as in pricing power and in the development of its
high-end offer.
Write to Joshua Kirby at joshua.kirby@wsj.com;
@joshualeokirby
(END) Dow Jones Newswires
June 09, 2022 02:27 ET (06:27 GMT)
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