What PPR Wants In Its Chinese Luxury Brand Acquisition

on July 19 2012 | in Retail | by | with No Comments

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The owner of Gucci, Bottega Veneta, and Yves St. Laurent – France’s PPR – is looking to expand by adding a Chinese luxury company to its ranks.

CEO Francois-Henri Pinault believe that young demographics in emerging markets provides strong growth prospects for branded goods.

While PPR is still hush on just what brand interests them, it will likely be a brand that matches the company’s growth pattern. Recently, PPR has been focusing solely on luxury goods and high-end sports apparel.

It is also known that the company is looking to expand in jewelry. PPR considered a Hong Kong jewelry brand last September, admitted CEO Francois-Henri Pinault, but it proved to be too small.

Pinault has revealed that PPR wants a Chinese brand “with its own identity” and that doesn’t follow the European concept of luxury goods. Pinault said talks are at an early stage and the acquisition may be completed this year.

Revenue at PPR’s luxury division grew 18 percent in the first quarter. Emerging markets increased by 20 percent. Emerging markets accounted for 38 percent of PPR’s luxury division sales in 2011, and 35 percent of its sports and lifestyle division sales.

According to the most recent study from Bain & Co. and Fondazione Altagamma, Chinese consumers, including those who spend while traveling, now account for more than 20 percent of global luxury sales. Despite a slowdown in China’s economic growth, sales of luxury goods there are expected to grow between 18 and 22 percent in 2012, compared with an increase of 6 to 7 percent for the overall sector.

Top luxury brands are making significant investments to get a share of that pie by opening hundreds of stores in Mainland China, and investing in everything from new luxury brands to real estate and e-commerce.

photo credit: ppr

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