(AOF) – Kering Eyewear has signed an agreement to acquire the French company UNT, Usinage & Nouvelles Technologies, in order to strengthen its position in the luxury eyewear industry. The transaction is subject to the validation of the competent competition authorities and should be finalized during the second quarter of 2023. Founded in 1989 in Morbier, in Bourgogne-Franche-Comté, UNT plays a key role in the manufacture of mechanical metal components high precision for the entire luxury eyewear sector. The company is located in Haut-Jura.
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Key points
– Luxury group born in 1963, owner of the brands Bottega Veneta, Gucci and Yves-Saint-Laurent;
– Turnover of €20.4 billion achieved 33% in Asia-Pacific, 6% in Japan, 27% in North America and 27% in Europe;
– Luxury “pure player” business model, based on growth exceeding that of the markets, on the creative autonomy of the Houses, the pooling of support functions and cross-functional expertise and the digital transformation at the service of distribution and client ;
– Capital controlled at 41.74% (58.44% of voting rights) by the Artemis holding company of the founding family, François-Henri Pinault being Chairman and Chief Executive Officer of the 13-member Board of Directors and Jean-François Palus Director deputy general;
– Healthy balance sheet: €14.8 billion in equity, €4.1 billion in cash and net debt of €2.3 billion.
Challenges
– “Empowering imagination” growth strategy aimed at increasing the quality of products and the foundation of brands and controlling distribution, via e-commerce and the continued network of stores, with a focus on three activities:
– YSL: doubling of turnover and operating margin of +33% before 2030,
– Gucci: revenues of €35 billion and operating margin of +41%,
– Eyewear: revenues of €2 billion and operating margin of +15%;
– Innovation strategy on 3 pillars:
– investment in companies with innovative business models, MIL laboratories for sustainable alternatives in jewelery and textiles, use of blockchain to counter counterfeiting, etc.;
– robustness of logistics infrastructures serving the customer experience: Luce application on product availability, virtual offer based on data, etc.,
– growth in e-commerce (15% of sales in 2022);
– 2025 “Care for the planet” environmental strategy, reported in an environmental income statement:
– reduce the group’s CO2 emissions by 50%,
– work on the environmental impacts of the supply chain (CO2 emissions, water consumption, air and water pollution, waste production and land use),
– create a “Sustainable Development Index of suppliers” and raise the traceability of animal welfare and the use of chemical products,
– promote “sustainable design”,
– create a Materials Innovation Lab (MIL) dedicated to Watches and Jewelry after that of fabrics and textiles,
– complete the compensation of CO2 emissions) for biodiversity and the new climate fund for nature;
–
Eyewear boosted by external growth (€1.1 billion in sales with Lindberg Paui Jim, etc.).
Challenges
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Strong dependence on Gucci, the 1st contributor to revenues and profits, hence the concern of investors over the steep decline in sales 4
th
quarter of 2022 in China and North America;
– Impact of the reorganizations in the distribution networks, the industrial investments made in 2022 (5.3% of sales) and the new beauty division, in charge of brand cosmetics, excluding those of Gucci and YSL managed by Coty and L’Oreal;
– Welcoming the public to the increase in selling prices;
– After a 15% increase in revenues, towards “profitable growth and strong return on capital employed;
– 2022 dividend of €14, after deposit of €4.5.
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Concerns remain
According to the Federation of Specialized Trade, Procos, in October 2022, activity fell by 1.5% over one year. Nevertheless, the beauty and health (+ 5.2%) and specialized food (+ 3.5%) activity is dynamic compared to October 2021. The frequentation of the points of sale was very impacted by the problems of fuel and bad weather. Compared to October 2019, the pre-covid year, the drop in attendance is very sharp (-20.9% in October). Shopping centers and the outskirts are more impacted than city centers with a difference of four to five points.
Several reasons for concern exist for the future. The players are experiencing a very significant scissor effect given the increase in their operating costs while the evolution of demand is very uncertain. Very few brands can pass on the increase in their costs to their selling prices. The federation therefore asks, among other things, to limit the indexation of the Commercial Rent Index to + 3.5% for the rents of all companies in 2023. It also invokes an absolute urgency: to cap the price of energy for 2023 and retroact on the contracts already signed to prevent the rate of failures from accelerating.