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Kering / PPR (France)

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French conglomerate PPR has reinvented itself over the past decade, and completed that process with a change of name in summer 2013 to Kering. It now sees itself as a specialist in two main sectors of luxury and sports lifestyle. Gucci Group, which PPR acquired in 1999 in a bruising takeover battle with LVMH, is the umbrella for all its high-end fashion and accessories brands, and is the global #3 in that sector behind LVMH and Richemont. The sports lifestyle division was constructed around sportswear company Puma, acquired in 2007 and a distant #3 behind Nike and Adidas. All of the group's older subsidiaries have been progressively sold off, including most of a substantial mail order business built around La Redoute and other catalogues. Entertainment retailer Fnac was spun off to shareholders in 2013, and the old PPR's last survivor, the main La Redoute catalogue business, was sold to management in 2014. In another change of strategy, Kering announced plans to spin off Puma to shareholders in 2018.


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Brands & Activities

Following completion of its massive sell-off programme, Kering is now split into just two operating units of luxury and sport & lifestyle. Gucci Group, which PPR acquired in 1999 in a bruising takeover battle with LVMH, is the umbrella for all its luxury fashion and accessories brands, and is the world's #3 luxury goods group behind LVMH and Richemont. In 2007, PPR took a step in a new direction by agreeing to acquire the controlling shareholding in sports lifestyle manufacturer Puma, previously owned by Guenther and Daniela Herz, members of the Tchibo family. At the same time, PPR offered to buy out Puma's remaining shareholders for a total of up to €5.3bn. By the end of 2008, PPR had acquired around 84% of Puma's equity. Puma is the world's #3 sportswear company behind Nike and arch-rival Adidas. In 2010, it was made the core of a new sport & lifestyle division within PPR.

Other businesses have all now been sold. Until summer 2013, the group's single biggest brand by revenues was still FNAC, France's leading entertainment retailer, and also one of the biggest retailers of computer and other audio-visual products. Computers account for close to a third of all sales. The business claims to offer an unrivalled selection of books, music, videos and games, while also providing "a cultural, social and exchange forum" through regular in-store events. It also offers travel agency services and is a leading retailer of entertainment tickets. Surcouf, another specialist sub-brand selling only computer equipment, was divested in 2009. Although its main operations are in France, where it has more than 90 stores, FNAC also has a further 60 outlets in Spain, Portugal, Brazil, Belgium and Switzerland. Combined revenues for FNAC that year were €4.2bn. PPR had been seeking a buyer for FNAC for several years, but without success. The business was spun off to shareholders in June 2013.

PPR's mail order division previously operated under the Redcats banner. At the end of 2011, it was the world's third largest home shopping company, with sales of almost €3.1bn from almost 30 different countries. It had 35m active customers worldwide that year, operating a large collection of different mail order businesses, mainly specialising in fashion and accessories, but also offering beauty products and appliances. The best-known brand was La Redoute, France's #1 fashion mail order business, with operations in 18 countries. However, the entire business was put up for sale towards the end of 2011. There were no buyers for the whole division, so PPR began selling off its numerous labels piece-meal during 2012. US subsidiaries Sportsman's Guide and Golf Warehouse were sold to Northern Tool & Equipment for $125m; OneStopPlus to private equity buyers for $525m; Vertbaudet and Cyrillus to Alpha Private Equity for €119m; Ellos to Nordic Capital. Other catalogues were sold or spun off during 2013. The last remaining asset, La Redoute itself, was finally sold to management in early 2014.

Several other divisions had already been sold. Conforama is France's foremost home goods chain selling furniture, furnishings, domestic appliances and consumer electronics products, usually at discount prices. It has around 190 stores in France, and additional outlets in Italy (some still under the Emmezeta brand), Switzerland, Spain, Portugal and Croatia. Towards the end of 2010, PPR agreed a deal to sell the business to South African company Steinhoff International. Another retail chain, upscale department store Printemps, which had been part of the group since 1992, was sold during 2006 to the Borletti Group, which also owns its Italian counterpart, La Rinascente.

Another unit, CFAO, was spun off at the end of 2009. It is a leading global distributor of automobiles, healthcare products, consumer and domestic appliances, operating primarily in Africa and France's overseas departments. Its biggest markets are Algeria and Morocco. The company works for a broad range of different, often competing manufacturers. In the automotive sector for example, its customers include GM as well as Ford, Toyota as well as Nissan and Mitsubishi, and Renault as well as PSA. Revenues rose by 13% in 2008 to €2.9bn, of which around half was generated by cars and trucks. PPR began the demerger of CFAO in December 2009 when it issued an IPO of around 58% of the business.


Group revenues for PPR, pre-breakup, peaked in 2008 at a little over €17bn, just before Francois-Henri Pinault began his reinvention of the business. The reinvented Kering group reported slightly lacklustre results for its first year under the new name. Revenues for 2013 were flat at €9.75bn, while impairments of retail operations and a dismal performance from Puma (where profits plunged by more than a third) caused reported net income to plummet to just €50m. Net income from continuing operations fell 37% to €862m. There was some improvement for 2014, with revenues rising to €10.04bn while net income soared to €529m. Operating income from recurring items, excluding the previous year's write-offs, was down only slightly to €1.18bn.

For 2015, currencies underpinned a 15% jump in revenues to €11.58bn. Attributable net income jumped by almost a third to €696m. Western Europe contributed 31% of group revenues, but Asia Pacific and Japan combined totalled 36%. North America added 23%.

The surge in the wider luxury market was reflected in excellent financial results for 2017. Group revenues jumped by 25% to €15.48bn, while net income more than doubled to €1.79bn. All the growth came from the brands themselves, with the Gucci brand alone registering an extraordinary 42% jump in revenues to over €6.2bn, even without the slight negative drag from currencies, while YSL managed 23%. It wasn't just luxury. Even Puma sporstwear delivered a 15% lift, topping €4bn for the first time at almost €4.2bn.

The Pinault family investment company Artemis Group remains the biggest shareholder in Kering with around 41% of equity and almost 57% of voting shares. Among other assets, it also owns the auction house Christie's, Chateau Latour and other vineyards, French first division football team Stade Rennais and weekly news magazine Le Point.


PPR was originally the investment vehicle for Francois Pinault, one of France's most successful entrepreneurs and investors, and now the country's second richest individual after Bernard Arnault of LVMH. The business was formed in 1963 under the name Pinault Group to trade timber, and subsequently moved into distribution and manufacturing of building materials. Following an IPO in 1988, Pinault changed the direction of the business, diversifying aggressively into retail. He acquired Conforama in 1991, and a year later launched a takeover of Au Printemps, the corporate umbrella for the famed Printemps department store in Paris. That deal also brought with it controlling stakes in fashion mail order company La Redoute and a financial services business, Finaref, most of which was later sold.

Two years later, the group acquired FNAC, originally a reseller of discounted photographic equipment, which had moved very successfully into bookselling in the 1970s, and into music and video in the 1980s. In 1994, Pinault-Printemps acquired the remaining shares it didn't already own in La Redoute and restructured as Pinault-Printemps-Redoute, or PPR for short. Five years later, Pinault began to develop a new division of the business by inserting himself into the increasingly bitter takeover battle between Bernard Arnault of LVMH and the revitalised Gucci Group. By acting as a white knight to Gucci, he was ultimately able to take full control of that business. After that, Pinault gradually reduced his direct involvement in PPR, passing control to his son. Instead he has busied himself with a number of other high-profile projects, including the refurbishment of a grand palazzo in Venice to form a public gallery for his huge modern art collection. Towards the end of 2006 he was involved in an ultimately unsuccessful attempt to launch a bid for French utilities group Suez.

Francois-Henri Pinault is executive chairman & CEO of Kering, as well as chairman of Artemis. Since he inherited control of the group from his father he has completely reinvented it in his own image. In his spare time, he has something of a reputation as a playboy. He has a child by former superstar model Linda Evangelista, and is currently the husband of Mexican actress Salma Hayek.

Last full revision 1st July 2016

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