Kering is about to sell a share of the $1 billion Fifth Avenue property After investments of over 4 billion in 2024, the conglomerate begins a recovery plan
After the news that Kering, the French luxury conglomerate that owns brands like Gucci, Saint Laurent, Bottega Veneta, and Balenciaga, is about to exit the ranking of the Euro Stoxx 50 (the fifty most important companies in Europe), the group is trying to get back on track with various strategic moves focused on real estate. According to Reuters, Kering is working with the investment firm Ardian to sell a stake in the luxurious building on Fifth Avenue in New York, purchased by Kering just a year ago. The precarious situation currently faced by the luxury fashion sector has led Kering to consistent revenue losses: in the past two years, shares of the French group led by François-Henri Pinault have fallen by about 60%. Facing an uncertain future, Kering has decided to start selling its properties beginning with New York City, to cut costs and regain economic strength through real estate.
The acquisition of the real estate on New York’s Fifth Avenue took place in January of last year for 963 million dollars. The space spans over 10,000 square meters across multiple floors, an asset with excellent commercial positioning for Kering’s brands. But the group’s acquisitions in 2024 have been too many, with total spending of over 4 billion euros for properties spread across the major fashion capitals. By the end of the year, the group's debt had reached 10.5 billion, a figure that just three years earlier had been almost zero. Jean-Marc Duplaix, deputy CEO of Kering, said that the conglomerate should be able to recover 2 billion euros within the next two years through further real estate sales, again according to Reuters. Among the properties under consideration for sale are also buildings in Tokyo, Paris, and a Milan property located on Via Montenapoleone, a shopping street considered, in 2024, the most expensive in the world.
Thus, the investments that the luxury industry has made in the real estate market during 2024 are proving to be the last lifeline for the industry. In December, Il Sole 24 Ore reported that Kering’s acquisition of the building on Via Montenapoleone for 1.3 billion euros was part of a recovery plan divided into multiple phases. According to early reports, the group had studied a spin-off project for a large real estate portfolio (the over 4 billion euros invested in 2024) to transfer the assets into a new company, through which, forecasts continued, it could sell shares to third parties or go public. According to the latest strategic moves by the French group, we are still in the early phases of the sales process (even though the new company does not appear to have been formed yet). Meanwhile, smaller but currently much more successful conglomerates like the Prada Group are showing strong investment abilities, from the acquisition of Versace in April to the latest deal with Italian craftsmanship company Rino Mastrotto Group.
