The luxury group has confirmed that it is withdrawing from the capital of the British start-up specializing in luxury bag rentals, in which it became a minority shareholder in 2021. Weighed down by Gucci’s results, Kering is seeking to clean up its accounts ahead of the arrival in mid-September of its new CEO, Luca de Meo (formerly of Renault).
Kering is tightening the screws.
As it prepares to welcome Luca de Meo, former CEO of Renault, to its executive management team in mid-September, and on the eve of the publication of what are likely to be mediocre half-year results on July 29, the luxury group has confirmed its withdrawal from the British start-up Cocoon, which specializes in luxury handbag rental.
The media outlet L’Informé was the first to break the news on July 17.
A few days later, the group, still under the leadership of François-Henri Pinault, admitted that it had withdrawn from Cocoon, apparently in January.
An investment of €640,000
The luxury player’s venture capital company, Kering Ventures, which focuses on innovative start-ups, acquired an 8.1% stake in the young company in 2021, two years after its creation.
Kering Ventures had injected around €640,000 during afundraising round of more than £2.5 million (€2.9 million), bringing in other investors such as Simon Beckerman, founder of Depop (a community marketplace dedicated to fashion), Lilly Wollman, former partner at Generation Investment (a sustainable investment management company), and Italian entrepreneur Riccardo Pozzoli.
Co-founded in London in 2019 by Ceanne Fernandes-Wong, who has experience in the second-hand market at Vestiaire Collective and Net-A-Porter, and entrepreneur Matt Heiman, also founder of “The Game Day,” Cocoon offers its customers the opportunity to “borrow a wide range of luxury handbags for less than the price of a daily coffee.” This is equivalent to the cost of a monthly or quarterly subscription, with home delivery.
The 2021 fundraising round, in which Kering participated, was intended to enable Cocoon to develop its platform, technological services, and logistics, as well as to recruit new staff. At the time, the platform, which collaborated with around 35 brands (including Balenciaga and Gucci, both owned by Kering, Chanel and Jacquemus), also planned to expand its range of handbags by establishing other partnerships with luxury fashion houses.
Triple-digit growth… in 2021
At the time of the 2021 fundraising, Cocoon was experiencing triple-digit growth.
However, the business model is undoubtedly taking longer than expected to generate profits commensurate with the investments made. Last year, Ceanne Fernandes-Wong had already withdrawn from the project.
While the projections for luxury rentals are impressive, the latter appears to be enjoying less exponential success than second-hand goods. Not to mention the proliferation of start-ups in this niche market.
There is talk of a global luxury rental market (all products combined) that is expected to reach $140 billion by 2030, with an average annual growth rate (CAGR) of around 7.5% between 2024 and 2030.
Meanwhile, the second-hand market for luxury bags alone, driven by continued growth, is already worth several billion euros in France alone in 2024.
Numerous competitors
However, the start-up was not the only platform to have the bright idea of renting high-end and luxury bags. It faces numerous competitors such as Sacdunjour, Sacdeluxe, InstantLuxe, Lorette et Jasmin, Feelchic, Fobe, Ornest, We Are Constance, and others.
Kering has always demonstrated its commitment to sustainable development, both internally and in its external growth.
In addition to Cocoon, at the end of 2024, Kering Ventures held minority stakes in other players in the luxury circular economy (Vestiaire Collective (second-hand), Revalorem (revaluation and recycling of unsold items and raw materials) and the Italian company Mogu, which develops biomaterials from mycelium, the vegetative part of fungi)…
But Kering undoubtedly no longer has the patience to wait for Cocoon to really take off.
Need for restructuring
Weighed down by the poor performance of its flagship brand Gucci for several quarters, the group is in dire need of restructuring its finances.
This is all the more important given that it has other significant investments to repay. In 2023, it acquired 30% of Valentino from the Qatari fund Mayhoola for €1.7 billion, with an option to acquire the entire company by 2028. In the same year, Artemis, the holding company of the Pinault family and a 40.9% shareholder in Kering, acquired the American talent agency CAA for €6.8 billion.
In October 2024, Armelle Poulou, Kering’s chief financial officer, said she expected the group to have net debt of around €11 billion by the end of 2025, excluding real estate transactions.
And last June, Kering indicated that it was considering placing its real estate assets in a new ad hoc structure to reduce the debt of its historic business and restore the investment capacity of its luxury brands.
These are all moves that the future CEO of Kering, Luca de Meo, is unlikely to disapprove of, as he will have to optimize a group that has been struggling for too long.
Read also > Kering considers real estate company to reduce debt
Featured photos: © Kering
