Alexander McQueen “is recording significant losses“, but it’s a brand that needs to be restructured, not sold immediately. The brand boomed with sneakers, but was managed as if it was a big label. This sums up the thinking of Kering CEO Luca de Meo, who, on the possible 50-60 layoffs in Italy, said: “If we don’t see the ability to recover within two or three years, we have to act”.
Restructure, don’t sell immediately
Luca de Meo has clarified once and for all Kering’s position on the struggling Alexander McQueen brand. First step: restructurig. Because, as the manager himself explains, it’s not currently very attractive. “In complex cases like this, where the brand is recording significant losses, the solution is very simple: we have to restructure. We have to bring McQueen back to an acceptable level in terms of structural costs and investments. Then, further down the line, we’ll see what to do with it”, de Meo told financial analysts in a conference call following the publication of Kering’s latest financial statements (source Fashion Network).
De Meo’s recipe
The Kering CEO made it clear to journalists that the brand is not for sale, at least not now. That’s because its market value would actually be too low and unacceptable for the French group. “I don’t think there are many potential buyers”, De Meo noted. “McQueen accounts for 4 or 5% of the group’s turnover (which would mean around €700 million), but with heavy losses. I’m in business, I look at financial performance. That’s what I told the staff in Italy. What do you expect from me? I’m not running a charity, I’m running a business. If we don’t see the ability to turn it around within two or three years, we have to take action”.
Mistakes not to be repeated
Luca de Meo analyzes the brand’s past and the mistakes not to be repeated. “The brand has been treated with the attention reserved for very large brands”, he said, referring to the 135 directly managed stores. “It’s a brand for which sneakers accounted for up to 80% of sales. This may have obscured its real potential and justified the investments. But when the sneaker trend slows down, the water level drops and rocks that crumble emerge. It doesn’t mean the label has no potential. But it needs to be refocused”, concludes de Meo.
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