Image Source Why Kering is collapsing It is certainly one of the most challenging times in the history of Kering ( OTCPK:PPRUF ) ( OTCPK:PPRUY ), a well-known French company that owns high fashion brands such as Gucci, Yves Saint Laurent, Balenciaga and Bottega Veneta. TradingView Its price per share fell from €798 to just over €300 in about 3 years, returning to mid-2017 levels. But what has justified a drop of about 60%? There are many factors, starting with the strategic choices made in recent years.
Gucci is Kering's most important brand and at the end of 2022 its creative director Alessandro Michele decided to leave his position after 7 years; Sabato De Sarno took his place. The reasons are not entirely clear, but what is certain is that Gucci under his leadership has achieved a stellar performance. In fact, from being an Italian luxury brand that was not in step with the times, it gradually became more and more popular among young people.
You can also see this transformation in the price chart; in fact, Kering has achieved an impressive performance during the time that Alessandro Michele has been the creative director (about +250%). Of course, this is only a first factor to consider, and Saturday De Sarno is not to blame for Kering's collapse. Losing one's creative director who dragged the company to the top is not easy to digest.
The second factor relates to how the company is managing its real estate portfolio: In January 2024 , it purchased a building on Fifth Av.