French luxury group Kering is in talks with Stella McCartney to sell its 50 per cent stake in the eponymous label back to the British fashion designer, according to a person familiar with the discussions.
Stella McCartney and Kering have operated the Stella McCartney brand since 2001 as a 50-50 joint venture. The discussions come as Kering is looking to remould itself as a pure luxury group, announcing this month that it will distribute most of its stake in German sportswear business Puma to shareholders.
A joint statement from Stella McCartney and Kering said: “As often between stakeholders there are regular discussions about the future of the partnership. Any significant change to the current relationship would naturally be made public at the appropriate time.”
Stella McCartney is a small label in the overall context of Kering, which recorded €3.93bn of revenues in the third quarter of 2017. According to the latest accounts for Stella McCartney, sales rose 31 per cent during 2016 to £41.7m, and the label booked a profit of £9.5m. This only reflects its UK business and does not take into account international sales.
The aim of the Puma stock sale is to allow Kering to focus on its higher-margin and faster-growing luxury brands, such as Gucci, Saint Laurent and Balenciaga. It provides them with centralised human resources, marketing and communications functions, while working with individual brands to drive growth.
According to analysts, Kering prefers to devote its attention to larger labels, finding that the smaller brands are too much work with too much uncertainty for the pay-off they provide.
One sector specialist added that the Stella McCartney label does not have the same growth potential as other brands in the Kering stable.
“The Stella McCartney brand is deeply rooted in ready to wear and athleisure,” said John Guy, head of luxury goods at brokerage Mainfirst. “Kering has realised that it’s hard to leverage the heritage of Stella McCartney in other categories like leather goods in the same way it can with brands like Balenciaga or Alexander McQueen.”
Ms McCartney has made ethical fashion a pillar of her label, long before the current vogue for sustainability. A vegetarian, she is known for the use of vegan and animal-free alternatives in her work, and her fur-free approach was recently adopted by Gucci. Last year Ms McCartney launched a debut menswear collection.
She studied fashion design at Central Saint Martins in London and completed an apprenticeship with tailor Edward Sexton, an old friend of her father — Paul McCartney of The Beatles — before taking over from Karl Lagerfeld as creative director at French house Chloé. Ms McCartney launched her own fashion house through the joint venture with Kering.
Kering (then known as PPR) entered the luxury sector in 1999 with the acquisition of a stake in Gucci. Since then it has added other designer labels including Saint Laurent, Bottega Veneta and Balenciaga, and signed partnerships with Alexander McQueen, as well as Stella McCartney.
The discussions over a stake sale were first reported by The Business of Fashion.
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