Kering acquires Creed as it seeks to drive beauty growth
KeringPrivate
It’s an all-cash agreement that’s expected to complete in the second half of the year “subject to clearance by the relevant competition authorities”.
The house, which was established in London as far back as 1760 by James Henry Creed, is now “the largest global independent player in the high-end fragrance market,” Kering said, and “possesses a distinct collection of timeless and sophisticated perfumes”.
And it will form a key part of the French conglomerate’s aim to grow in the buoyant beauty market.
The beauty arm of the luxury giant said the purchase “is a major step for Kering Beauté. A perfect fit with its portfolio of renowned luxury brands, it immediately provides Kering Beauté with the required scale, an outstanding financial profile, as well as a platform, supporting the future development of other Kering Beauté fragrance franchises, by leveraging in particular Creed’s global distribution network”.
The company has big plans for its new acquisition, although it stressed that it would preserve Creed’s “rich heritage and high-end brand image”.
While doing that, it will “further unlock Creed’s potential across geographies, channels, and categories, notably through the acceleration of its development in China and in Travel Retail, and further expansion of the feminine fragrance portfolio, body and home categories”.
That all makes perfect sense for the Beauté unit and for Kering in general. As mentioned, the luxury fragrance sector is performing strongly with double-digit growth as well as “high profitability, and significant revenue recurrence driving long-term resilience through the cycle”.
Creed’s soon-to-be new owner said “the beauty category is a natural extension of Kering’s luxury universe, and the group is confident its expansion in this strategic segment will create lasting value for the group and its houses”.
The house of Creed was originally established as a tailoring business but quickly became known for its perfumes and established a reputation for quality that continues today under Olivier Creed and his son Erwin.
Olivier Creed oversaw the launch of Aventus back in 2010, which has since become the company’s best-selling scent brand ever. That scent and its wider portfolio is available in around 1,400 doors globally, as well as at its Mount Street and Regent Street
In recent years that has helped the company deliver double-digit growth and “remarkable profitability with very high EBITDA margins”. Its revenue was more than €250 million in the year to the end of March.
Kering Charman and CEO François-Henri Pinault said of the new acquisition that it “represents Kering Beauté’s first strategic initiative, and demonstrates our commitment to developing a strong position in the luxury beauty segment.”
Meanwhile Kering’s group MD Jean-François Palus stressed how the purchase will “facilitate and amplify our development in fragrance” and called it “a milestone in the development of Kering Beauté”.
And beauty unit CEO Raffaella Cornaggia added that “we see a very compelling rationale and mutual strategic benefits in terms of expertise, network, and geographical footprint. We look forward to working with CEO Sarah Rotheram and her passionate team to continue to drive Creed’s success worldwide”.
