House of Pinault: The History and Business of Kering and Gucci

Most people are familiar with the iconic luxury brands of Gucci, Yves Saint Laurent, and Bottega Veneta – names that have mastered the art of desirability and stood the test of time. Under the leadership of the Pinault family, Kering, the owner of these brands, has undergone an extraordinary transformation. From its origins in timber – far away from the glittering flagship stores lining the Champs-Élysées, Fifth Avenue, and Via Monte Napoleone – the group has become one of the world's largest luxury empires. This is the story of Kering.

• The Pinault family: The transformation from Établissements Pinault to Pinault SA, then PPR, and ultimately Kering began under François Pinault and now continues with his son, François-Henri.

• Unexpected origins: Today's renowned luxury group of Kering began as a timber trading company in 1962.

• The white knight: In 1999, the Pinault and Arnault families clashed in a dramatic battle over Gucci. Facing an unwanted takeover by LVMH, Gucci turned to Pinault's PPR as a "white knight," securing their favored partnership for the brand.

• A defining acquisition spree: Following the pivotal Gucci acquisition, PPR rapidly expanded its luxury portfolio. In just three years, the French group added Yves Saint Laurent, Boucheron, Bottega Veneta, and Balenciaga.

• Challenges at Gucci: Kering's crown jewel, Gucci, has faced significant challenges in recent years, marked by leadership change and sharp revenue declines amid headwinds in the luxury industry.

Like countless other stories in the luxury industry, this one begins in France. Yet, for decades, what we now know as Kering seemed almost unimaginable, given its unlikely beginnings far away from fashion, leather goods, and runway shows.

François Pinault, Kering's founder, was born and raised in a small village in Brittany in the 1930s. After dropping out of the College Saint-Martin in Rennes, he joined the family's lumber mill, where he learned his trade in an industry where he would have decades-length of success.

In 1962, François started his own business, Établissements Pinault, a timber production and trading business. The company was thriving from the start which inspired him to expand rapidly.

Throughout the late 1960s and 1970s, Pinault steadily grew his timber empire by acquiring smaller firms across the country. His strategy focused on streamlining operations by cutting jobs and raising productivity through automation, and then quickly selling the transformed businesses for a profit.

The momentum behind François Pinault's business ventures was further fueled by the political scene in France at the time. The global oil crisis of the 1970s triggered economic challenges, forcing many companies into bankruptcy. In an attempt to save jobs, the French socialist government intervened by nationalizing industries, providing subsidies, and the opportunity to acquire failing companies for pennies.

By combining the two latter mentioned policies, Pinault's company began growing its portfolio. From its timber operations, it eventually expanded into construction materials and paper suppliers – and the deal sizes increased from symbolic sums to multimillion figures.

A fleet of Pinault's timber transport trucks.

A fleet of Pinault's timber transport trucks.

Renamed Pinault SA, the company went public on the Paris Stock Exchange in 1988, gaining access to capital to continue its expansion. By then, it owned 180 companies with an annual turnover of 10 billion francs (approximately $7 billion). At the time, it was still described as a group that specialized in timber trading, distribution, and processing.

François Pinault's success in diversifying beyond timber inspired a new strategic direction, one that moved the group far from its industrial roots. From acquiring lumber and paper manufacturers, the company expanded throughout the 1990s to include hardware chains, retailers, and mail-order houses. This shift was further underscored by divesting its manufacturing assets.

After considerable acquisitions of the iconic French department store chain Printemps and the multi-line retailer La Redoute, the group was renamed Pinault-Printemps-Redoute, or PPR for short. Still, at this time, PPR mainly made its acquisitions in France with few exceptions.

In 1992, François Pinault established the holding company Groupe Artémis (named after the Greek goddess of hunting), which became the Pinault family's investment vehicle. Artémis continues to control approximately 42% of PPR's (now Kering's) share capital.

While PPR had not yet made substantial advancements outside of France, Artémis showed the way. In 1998, the holding company acquired the historic British auction house Christie's for $1.2 billion – signaling Pinault's growing interest in high-value goods.

One year later, PPR's international presence – and its future direction – would shift dramatically. An epic battle was about to unfold, with an outcome that would redefine the group's focus.

As of 2024, Gucci generates roughly half of Kering's revenue, maintaining its position as the group's most important and iconic brand for over two decades. In fact, it is no exaggeration to say that Gucci is one of the world's most iconic brands.

The company, founded in Florence in 1921 by Guccio Gucci, had in the late 1990s grown into one of the world's most prestigious luxury brands. Renowned for its craftsmanship and its association with celebrity style icons it had built a global presence with its distinctive double-G logo.

The allure of Gucci had created a desirability that extended beyond consumers.

Rewind to early 1999, and Kering was far from the luxury house we know today. Although it had shifted from industrial acquisitions to a broader, generalist approach, François Pinault’s PPR had yet to make its mark on the global stage.

That was about to change. It all began with a high-stakes corporate drama involving Gucci and LVMH.

In January 1999, Gucci became the target of an aggressive takeover attempt by LVMH, orchestrated by its founder Bernard Arnault. While LVMH initially portrayed its stake as a passive investment, Gucci's leadership, particularly CEO Domenico De Sole and creative director Tom Ford, viewed it as a direct threat to their independence and vision for the brand.

Gucci decided to fight back. In a bold defensive measure, they created an Employee Stock Ownership Plan (ESOP), diluting LVMH's ownership. Seeking a more favorable partner, Gucci turned to France's then-richest man, François Pinault. The previously uninvolved PPR stepped into the rescue as a “white knight” and agreed to purchase a 42% stake in the company for $3 billion in March 1999.

The deal was a dramatic move, but it didn't end the conflict. LVMH responded with two aggressive bids to purchase Gucci outright, but both offers were rejected. Legal battles followed, with LVMH attempting to block the PPR-Gucci transaction and challenging Gucci's defensive tactics. For months, the dispute played out in courtrooms and boardrooms.

In May 1999, a Dutch court ruled in favor of Gucci, clearing the way for PPR's acquisition to proceed. By 2001, Pinault finalized a settlement with Arnault, buying out LVMH's remaining shares in Gucci for $806 million. Over the next few years, PPR steadily increased its holdings, ultimately achieving full ownership of Gucci in 2004.

The events of 1999 set off an intense acquisition spree for PPR, marking the beginning of its transformation into a global luxury powerhouse we now know as Kering.

Kering's acquisitions since going public – transitioning from retail to luxury in 1999.

Kering's acquisitions since going public – transitioning from retail to luxury in 1999.

By the time of the battle of Gucci, Arnault and his LVMH were just over a decade into building what today is by far the world's largest luxury empire with a market cap of over €300 billion. While conglomerates dedicated solely to luxury may seem commonplace today, this was not always the case. As Arnault began forming LVMH through a series of acquisitions in the 1980s and beyond, his approach was unique.

His vision for LVMH was both pioneering and transformative, seeing strength not only in individual luxury brands but also in the synergies of a diversified portfolio. By pooling resources and sharing expertise, he streamlined operations, reduced costs, and enhanced each brand's value. Smaller brands thrived under LVMH's vast network, which in turn strengthened the group's position and allowed it to dominate the luxury market across multiple sectors.

By the time PPR began its transition into luxury, LVMH was already becoming a rather large luxury conglomerate, with renowned brands such as Louis Vuitton, Moët & Chandon, Givenchy, Dior, Hennessy, and Marc Jacobs. Its success was shaping a blueprint not far from the headquarters of another rising competitor.

However, LVMH's success rested on more than strategy – it was about mastering the art of desirability. So what makes these products so irresistible?

Central to the luxury industry at large, is the art of creating desirability – a complex interplay of a demand driven by a brand's allure. At the core of luxury brands' allure lies a rich heritage and an unwavering commitment to quality. Over decades, and in some cases centuries, these brands have meticulously crafted and refined their identities, establishing themselves as symbols of status and prestige. Their stories and legacies elevate products from mere commodities to cherished artifacts, resonating deeply with consumers' identities and aspirations.

An important factor in creating desirability is scarcity. By limiting the availability of their products, luxury brands amplify their appeal, as rarity often equates to value in the minds of consumers. Consider Ferrari, Hermès, and Rolex. These three brands operate in completely different categories, yet each has mastered the art of leveraging scarcity to enhance desirability. By combining their rich histories and relentless dedication to excellence, they have created an aura of exclusivity that secures their unmatched brand equity within their respective fields.

Closely tied to scarcity and desirability is price. Even if supply could meet demand, the high price tags place luxury items out of reach for most consumers. The very exclusivity of these products, both in availability and affordability, reinforces their perception as symbols of luxury.

Back at PPR, acquiring Gucci marked a significant turning point for the company. While its operations had yet to fully transition into a dedicated luxury group, the eclectic PPR was setting a new course.

This transformation, however, didn't take place directly under PPR's roof but rather under Gucci's. The cash injection from PPR's "white knight" intervention had provided Gucci with the capital to build its own portfolio of luxury brands – strategically guided, of course, by its new parent company. Ironically, as it turned out, LVMH not only lost the battle for Gucci but also fueled the rise of a well-funded competitor eager to expand.

In the years around the turn of the millennium, the group expanded its portfolio with key acquisitions, including Yves Saint Laurent (1999), Boucheron (2000), Bottega Veneta (2001), and Balenciaga (2001), among others.

By shifting its focus to luxury, PPR adopted a more specialized acquisition strategy, increasing the potential for synergies across its portfolio companies. In addition to sharing resources and expertise, these companies gained access to the group's centralized logistics and supply chain, which streamlined sourcing and distribution channels.

PPR also played a pivotal role in shaping retail strategies, often facilitating the development of flagship stores in key markets to strengthen brand visibility and improve customer engagement.

As we introduce the second generation of the Pinault family, it's important to clarify the distinction between these two central figures in Kering's story. François Pinault is the founder, the man who had led the company up to this point. His son, François-Henri Pinault – who added “Henri” to his name to avoid confusion with his father – takes center stage from here on.

Coinciding with PPR's transition into luxury, a quiet but significant shift was also happening behind the scenes at both PPR and Artémis. Having steered the group from its timber-trading origins to a global powerhouse, François Pinault was growing older. The sudden passing of a close friend prompted him to reflect on succession planning and the importance of securing the company's future against unforeseen events.

However, as François-Henri Pinault revealed in a 2014 Harvard Business Review article, the succession process had been underway for years:

The weight of inheriting an empire was further discussed in a Fortune 500 interview from 2009, where François Pinault's perspective on his son's preparation was clear:

And conquer it he did. François-Henri had been working within the family business since 1987, steadily earning his place. He held senior positions across various departments in PPR's portfolio companies, gaining essential operational experience.

In 1997, he became CEO of its retail chain Fnac, and shortly after, he was appointed deputy CEO of PPR while also serving on its board of directors. By 2003, he was ready to succeed his father, taking on the role of president and chairman of Artémis. In 2005, he officially assumed the position of president and CEO of PPR.

As François-Henri filled in his father's big shoes, he not only continued the group's strategic pivot toward luxury but also sharpened its focus. Reflecting on this transition, he explained:

Under the younger Pinault's leadership, the group underwent a significant transformation. PPR moved from a diverse, retail-focused portfolio to a sharp focus on luxury – and for a time, sports. This strategic overhaul included the divestment of its French retail assets, even the brands that had lent their names to the group.

At the same time, PPR continued acquiring luxury brands. Perhaps not on the same scale as the marquee acquisitions around the turn of the millennium, but valuable additions nonetheless to its already prestigious luxury portfolio.

The group's venture into sports, however, proved to be temporary. Early in François-Henri's tenure, PPR acquired notable sportswear and lifestyle brands, including Puma (2007), Cobra Golf (2010), and Volcom (2011). By the following decade, these assets were divested as the company decisively realigned its strategy to focus exclusively on luxury.

François-Henri (to the left) and his father François (to the right).

François-Henri (to the left) and his father François (to the right).

In 2013, PPR was renamed Kering. The name change was both a practical necessity – given the divestment of Printemps and the ongoing sale of La Redoute – and a symbolic expression of the group's new identity. The name Kering references the Pinault family's roots in Brittany, where ker means “home,” while also playing on the English word caring, reflecting the group's values.

The logo, a minimalist and elegant owl, was chosen for its symbolism as a “discreet and protective animal” and happens to be François Pinault's favorite animal.

By the time of the rebranding, France accounted for only 5% of Kering's sales, down from over 40% a decade earlier – illustrating the group's shift in focus. During the same time, total sales declined from €24.4 billion to €9.7 billion, EBIT increased from €1.3 billion to €1.75 billion, with margins rising from 5.3% to 18%. In essence, Kering had transformed from a national retail conglomerate into a streamlined and more profitable global luxury group.

Following the rebranding, Kering shifted its focus from acquisitions to driving organic growth within the group. In the Harvard Business Review article, François-Henri Pinault elaborated on Kering's approach to acquisitions:

An essential component of Pinault's strategy has been preserving the unique DNA of each brand, as described above. This is achieved by granting significant autonomy to each brand's creative director and CEO, ensuring individuality while leveraging the group's shared expertise and resources – a dynamic we will explore in greater depth later.

After decades of transformation, a seamless succession, and a clear rebranding, much of Kering's structure has remained largely unchanged in recent years. Today, unlike its dynamic past, understanding the group's business is synonymous with understanding its fixed portfolio of brands.

Let's take a closer look at the most significant brands within the Kering group.

Kering's revenue by house as per Q3 2024.

Kering's revenue by house as per Q3 2024.

We begin with the crown jewel of Kering's portfolio: Gucci.

As touched upon earlier, Gucci had come a long way from its early beginnings in Florence under founder, Guccio Gucci. From the outset, the brand was built on a foundation of exceptional craftsmanship and high-quality materials. While Gucci established a strong presence within Italy before World War II, its international expansion gained momentum in the post-war era.

By this time, the company had diversified its product offerings beyond its original leather goods, incorporating other premium materials while maintaining its hallmark of superior quality. In 1953, Gucci opened its first store outside of Italy on Fifth Avenue in New York City. This milestone was soon followed by store openings in London, Paris, and Tokyo, marking Gucci's emergence as a global luxury brand.

During this period of rapid growth, Gucci's reputation for quality was further enhanced by its association with iconic celebrities such as Grace Kelly, Audrey Hepburn, and Jackie Kennedy. These endorsements helped establish Gucci's status as a worldwide symbol of sophistication and exclusivity.

After a challenging period in the 1980s, Gucci entered a transformative era in the 1990s. The new leadership in CEO Domenico De Sole and creative director Tom Ford, revitalized the brand and steered it under Kering's ownership. Both De Sole and Tom Ford would also go on to play key roles in shaping the parent company's acquisitions in the early 2000s.

What followed was a period of mixed results under creative director Frida Giannini (2006–2015). Her more pragmatic and accessible style initially achieved success, drawing inspiration from Gucci's archives and heritage. However, over time, intense competition from luxury giants like Louis Vuitton, Hermès, and Chanel contributed to a slowdown in Gucci's growth during the latter part of her tenure.

Alessandro Michele, who had been with Gucci since 2002, assumed the role of creative director in January 2015 and redefined the brand. He introduced a bold, maximalist aesthetic characterized by eclectic designs, vibrant colors, and gender-fluid styles – a striking departure from the more polished and commercially-oriented approach under Frida Giannini. His new direction resonated with a younger, fashion-forward audience and celebrities alike, propelling Gucci to unprecedented growth.

In the Harvard Business Review article from 2014, François-Henri expands on Kering’s brand management while extending on the importance of the creative director and CEO:

Michele eventually parted ways with Gucci in 2023. The man tasked with leading the brand into its next chapter was Sabato De Sarno, a man with experience at Prada, Dolce & Gabbana, and most recently Valentino (partly owned by Kering since 2023).

Following the departure of Alessandro Michele, continuing his transformative legacy was no small task. Sabato De Sarno has introduced a refined aesthetic to Gucci, marking a clear shift from Michele's maximalist style. De Sarno's designs emphasize foundational pieces with clean lines and exquisite tailoring, highlighting personal style through understated elegance and unexpected details.

In terms of matching De Sarno with “a strong and complementary CEO”, Gucci has seen notable leadership changes in recent years. After Marco Bizzarri's nearly decade-long tenure as CEO ended in 2023, Jean-François Palus – widely regarded as Pinault's “right-hand man” – stepped in as interim CEO. In October 2024, Kering appointed Stefano Cantino, a former executive at LVMH and Prada, as Gucci's new CEO.

During these transitional years, Gucci has faced a sharp decline in sales, with revenue falling in 2023 and 2024. This negative trend was particularly evident in Q3 2024 when revenue decreased by 26% year-over-year. The downturn reflects not only internal challenges but also broader pressures in the luxury market, including shifting consumer preferences and economic uncertainty across many of its markets.

One market of particular concern is Kering's Asia-Pacific region, where China is the dominant contributor. The economic slowdown in China has significantly impacted performance, as illustrated by Gucci's 38% year-over-year revenue decline in the region for Q3 2024.

Navigating an internal turnaround amid such conditions is particularly challenging. Given that Gucci contributes roughly 50% of Kering's revenue and 70% of its profit, the group's overall performance has inevitably mirrored the brand's struggles in recent years.

It is worth noting, however, that periods of underperformance are not uncommon for luxury brands. A decade ago, Gucci faced similar challenges before the arrival of Alessandro Michele and Marco Bizzarri sparked a remarkable revival. Whether the combined efforts of Sabato De Sarno and Stefano Cantino can elevate Gucci to new heights remains to be seen.

That said, looking back over the past decade through 2023, Gucci has achieved a solid CAGR of 10.7% in revenue, a steady performance given the brand's already substantial size at the start of the period.

Gucci's growth rate per quarter since 2015 under Alessandro Michele and Sabato De Sarno.

Gucci's growth rate per quarter since 2015 under Alessandro Michele and Sabato De Sarno.

Yves Saint Laurent's history dates back to 1961, named after its visionary founder who redefined modern fashion with his daring and innovative designs. The brand became known for challenging conventions, blending masculine and feminine elements, and setting new standards of elegance for the modern woman.

Iconic pieces such as the Mondrian dress and the Le Smoking tuxedo suit for women – immortalized in Helmut Newton's famous 1975 photograph of Vibeke Knudsen for Vogue – cemented Yves Saint Laurent's enduring influence in fashion.

Kering's history with the fashion house dates back to November 1999, shortly after the intense negotiations surrounding Gucci and LVMH. In 2012, the brand underwent a significant transformation, rebranding its ready-to-wear line as Saint Laurent while retaining the Yves Saint Laurent name accessories and cosmetics. This strategy modernized the brand while honoring its heritage – keeping the iconic YSL monogram.

Since the rebranding, Saint Laurent has achieved an impressive CAGR in revenue of 19.9%. Much of this success has been achieved under former CEO Francesca Belletini (2013-2023) and creative director Anthony Vaccerello (2016-present). Today, Saint Laurent stands as Kering's second-largest brand, accounting for 16% of total sales, solidifying its position as a cornerstone of the group's luxury portfolio.

Bottega Veneta was founded in 1966 in Vicenza, Italy, by Michele Taddei and Renzo Zengiaro. The brand quickly distinguished itself through exceptional craftsmanship and the creation of the intrecciato weaving technique – a method of weaving leather strips that became its signature. To this day, the intrecciato design remains central to the brand’s identity and synonymous with Bottega Veneta's quiet luxury.

The Italian fashion house became a part of Kering in 2001. Former Gucci CEO, De Sole reflected on the acquisition in an interview with Womens Wear Daily:

At the time of acquisition, Bottega Veneta generated €56 million in revenue. De Sole promised that access to capital under Kering would accelerate the brand's global development – a promise that has been fulfilled. Bottega Veneta has achieved a remarkable CAGR of 16.6% in revenue since joining the group in 2001.

About a quarter of Kering's revenue comes from its other fashion houses and eyewear segment. Some of the more notable brands are Balenciaga, known for its designs and cultural relevance, often pushing the boundaries of fashion; Alexander McQueen, celebrated for its theatrical runway shows and intricate craftsmanship; and Boucheron, one of the oldest high-jewelry houses in Paris.

One of Kering's most recent acquisitions is Valentino, in which it acquired a 30% stake in 2023, with an option to purchase the entire company by 2028. Should Kering exercise this option, Valentino would become one of the group's leading brands, having recorded annual revenue of €1.349 billion in 2023. Notably, Gucci's former creative director, Alessandro Michele, was appointed Valentino's creative director in 2024.

Although the story of Pinault's Kering began in 1962, the histories of its brands reach back much further, tracing back not decades but centuries. Kering's luxury portfolio includes some of the world's most enduring names. Among the oldest are Tuscany's esteemed porcelain manufacturer, Ginori 1735, founded in – yes, you guessed right – 1735, and the group's London-based perfumery, Creed, with origins in 1760.

Few transformations rival Kering's – from timber trading to a global luxury powerhouse. Under the guidance of the Pinault family, the group has become one of the world's largest luxury empires, home to some of the most enduring brands. As Kering now faces challenges, its portfolio's resilience is being tested. Rooted in heritage, defined by quality, and driven by desirability, these iconic names will stand the test of time once again.