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Comment – Good Buy Creed?

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News in that Kering, the luxury giant that owns Gucci, Balenciaga and Bottega Veneta, has bought the fragrance company favoured by Essex boys, Creed. Reports say that the first major acquisition for ‘Kering Beauté’ has cost the group $2 billion for the niche fragrance house.

Kering could be a company on the luxury fragrance rebound after narrowly losing out on the Tom Ford label to Estée Lauder for $2.8 billion last year.

When you compare the two brands and prices it feels hard to believe that $2 billion is the correct price for Creed. Tom Ford has a much bigger store network, categories and potential for growth. Creed’s annual revenues of over €250 million ($273 million) for the year ending March 2023 compares meekly with Tom Ford’s revenues estimated to be in the region of $800 million a year.

“The acquisition of Creed represents Kering Beauté’s first strategic initiative, and demonstrates our commitment to developing a strong position in the luxury beauty segment,” said Francois-Henri Pinault, chairman and chief executive of Kering.

Raffaella Cornaggia, a former executive at Estée Lauder, was brought in to lead Kering Beauté. “Creed has a unique positioning in the fragrance market. We see a very compelling rationale and mutual strategic benefits in terms of expertise, network and geographical footprint,” she said.

Creed is a strong fragrance brand. It is particularly dominant in men’s fragrances. Thanks to its cult and bestselling Aventus scent, launched in 2010, it has grown to be one of the most in demand and name checked of fragrance companies. You only have to look at the fragrance dupes market to see how often it is referenced. Currently costing £210 for 50ml on John Lewis, it has the high margins that luxury groups love.

Creed touts itself as a historical brand, founded in ‘1760’, but its lineage is slightly cloudy and what started as a Georgian tailoring house morphed, in the 1980s, into fragrance. The first trademark for Creed perfume was registered in 1979 in France. Its first successful fragrance was Green Irish Tweed launched in 1985.

In February 2020, BlackRock’s Long Term Private Capital and Javier Ferrán, the Spanish businessman and chairman of Diageo, acquired a majority stake in the fragrance company from Olivier Creed, after more than 260 years under family ownership, for an undisclosed amount. Three years later they are selling up and no doubt at a hefty premium. 

Creed currently has monobrand boutiques in Paris, London, New York City, Beverly Hills, Sydney, Dubai, Houston, Las Vegas, Kuwait City, Vienna, Mexico City, Milan, Miami, and Dallas. 

The acquisition will propel store openings, but it will need more hit fragrances, particularly aimed at women, to grow and balance out the company. If the reported price tag is correct then it will need those Essex boys to bathe in Aventus, even more than they already do!

Aventus, Comment, Creed, Expert, Kering Beaute