© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
January 15, 2013 4:41 pm
PPR, the French luxury and sports lifestyle group, has bought a 51 per cent stake in British fashion house Christopher Kane, becoming the first major luxury conglomerate to invest in a new ready-to-wear brand since the recession.
François-Henri Pinault, chief executive of PPR, said: “Christopher is a truly great talent who has shown a real sense of modernity in the way he mixes elegance and subtle constructions . . . [the brand] has tremendous intrinsic growth potential.”
The terms of the deal were not disclosed. The current management team, with Mr Kane as creative director and his sister Tammy as chief executive, will remain in place, and the brand will continue to be based in London.
Christopher Kane marks the third luxury acquisition for PPR in the past two years. In 2011 it bought Italian menswear brand Brioni, and last December it bought Chinese jeweller Qeelin. The deals exemplify Mr Pinault’s strategy of increasing PPR’s portfolio by making small to medium-size acquisitions.
Christopher Kane becomes PPR’s third British ready-to-wear brand. PPR already has a joint venture with Stella McCartney and a majority stake in Alexander McQueen. The group’s success at building those brands, both of which Mr Pinault said have surpassed €100m in revenues, drove it to look for another such opportunity.
Alexis Babeau, managing director of the PPR luxury division, said: “What really matters to us is not size or profitability, but what a brand can become tomorrow.”
Christopher Kane, which is known for its elegant and cool designs, was founded in 2006 and expanded into menswear in 2010. It currently has 26 employees and sells to approximately 200 wholesale accounts around the world. Its turnover has been estimated at under €10m, and it is profitable.
Thomas Chauvet, an analyst at Citi, said: “The initial investment is probably almost immaterial from PPR’s point of view, which means while the potential returns are large if they replicate the success of McCartney or McQueen, the risks are very small.”
Mr Babeau outlined a three-pronged growth strategy for the brand. First, retail, with a London store planned to open in 2014; then accessories such as leather goods and shoes, which currently only comprise 4 per cent of sales; and finally Asian expansion.
Hugh Devlin, a lawyer with Withers in London who advised on the deal, said he believed other groups would soon follow PPR’s lead and look at young British brands as potential acquisitions.
“London is a recognised centre of excellence in creative entrepreneurs. We would anticipate that there will be other investment transactions involving London designers in the coming 12 months,” Mr Devlin said.
Mr Kane will hold his first womenswear show as a part of PPR on February 18 during London Fashion Week.
PPR reported 2012 third-quarter revenues of €2.6bn, up 6.6 per cent from the same period last year, with the luxury division reporting 11.9 per cent revenue growth. It is in the process of divesting its retail assets Redcats and Fnac to concentrate on its luxury and sports divisions.
Please don't cut articles from FT.com and redistribute by email or post to the web.