Is Alexander Wang Leaving Balenciaga?
Turbulent times for Balenciaga. The fashion company controlled by the giant Kering (formerly KKR) has recognized that it is in negotiations with its current creative director, Alexander Wang, on his future in the firm
The alarm was triggered after a report in the magazine Women’s Wear Daily, which claimed that Wang was considering leaving his job as creative director of Balenciaga, the brand created by Cristobal Balenciaga in San Sebastian in 1917 (although some sources set its founding in 1919, when it opened its first store) and was acquired by Kering in 2001.
Kering admitted that it is negotiating with Wang on its future, but has not given any details on whether these negotiations could be related to his departure. According to information reported to the fashion magazine, the goal of Wang is to focus on its own brand. In the industry there are rumors for months that he is looking for investors to finance his new adventure.
Wang joined Balenciaga in December 2012 to replace Nicolas Ghesquiere, who left the company to work in Louis Vuitton, the main competitor of Kering. Wang was the aim of expanding the brand to make it a world leader in the industry, a goal that has not been totally reached, while recognizing that sales have developed positively (keeping a double-digit growth revenue rate).
Kering does not break down sales of its luxury brands, but after the latest annual results (for the 2014 year) Citigroup experts estimated annual sales at €300 million for Balenciaga, representing just over 2.5% of Kering total revenues. Anyway, Kering´s plans for Balenciaga remain ambitious, including store openings and new business lines and a worldwide campaign to celebrate the centenary of the brand in 2017.
In any case, the potencial exit of Wang would create some uncertainty within Balenciaga, although it should not affect the price of Kering, the giant French luxury industry controlled by Francois-Henri Pinault, because as we mentioned before the importance of Balenciaga in the group balance is quite limited.
Kering losses 2% so far this year in the stock market and keep virtually the same price than twelve months ago, in July 2014. However, its shares lost more than 20% from the record highs reached in the first quarter of this year. Today its market cap is about €20 billion, barely a quarter of the market value of their main competitor, LVMH.
Disclosure: The author is not responsible for the views expressed in the article. The text was written freely expressing ideas, without receiving any compensation. The author has no business relationship with any of the companies whose shares are listed in this article.