What: Kering sells The Mall Luxury Outlets to Simon Property Group for EUR 350 million while maintaining brand presence in the Italian outlet locations.

Why it is important: This transaction demonstrates how luxury groups are streamlining their operations by divesting non-core retail assets while ensuring strategic distribution channels remain accessible to their brands.

Kering has agreed to sell The Mall Luxury Outlets to Simon Property Group, transferring ownership of two Italian outlet centers located near Florence and on the Italian Riviera in Sanremo. The EUR 350 million deal includes provisions for Kering's brands to maintain their presence in these high-end shopping destinations, aligning with the group's strategy to concentrate its outlet distribution in select exclusive venues. Established in 2001, these outlets have been significant retail channels for luxury brands. The transaction comes as Kering focuses on its core luxury brands, including Gucci, Saint Laurent, and Bottega Veneta, particularly as Gucci faces challenges with a 25% drop in organic sales in the third quarter. Simon Property Group, as one of the world's largest luxury mall operators, brings extensive expertise in outlet operations, as demonstrated by their successful Woodbury Common Premium Outlets model.

IADS Notes: The acquisition of Kering's The Mall Luxury Outlets by Simon Property Group reflects significant shifts in luxury retail property strategy. Simon's strong position in the market is evidenced by their Q2 2024 performance, which showed a 5.2% increase in operating income to USD 1.3 billion and robust leasing volumes. This acquisition aligns with broader industry movements, as demonstrated by LVMH's parallel strategy in July 2024 when they acquired a stake in Value Retail through L Catterton. These transactions suggest a trend where specialised retail property operators are consolidating premium outlet operations, while luxury groups focus on their core brand operations while maintaining strategic presence in key outlet locations.

Kering sells The Mall Luxury Outlets to Simon Property Group