What do Gucci, Bottega Veneta and Saint Laurent have in common? All are owned by Kering, a global luxury brand in which Scottish Mortgage Investment Trust (SMT) has an investment.
Kering is one of the biggest holdings in the popular investment trust, representing 3.4% of the portfolio.
In an interview with Baillie Gifford client service director Catharine Flood, fund manager James Anderson is optimistic about the sector outlook, flagging a global desire for expensive fashion.
Anderson believes successful luxury brands need a range of brands and different price points in a growing market to stand out from the competition.
The fund manager is conscious of challenges facing the industry, arguing that a personalised service should be a priority regardless of whether someone is buying products in-store or online.
Another issue for luxury brands is how to penetrate the Chinese market, highlighting it is a key market despite being ‘very challenging.’
He says companies such as Prada have failed to navigate different geographies within China and various retail structures.
Anderson is also optimistic about luxury car brand Ferrari which is another well-known name in Scottish Mortgage’s portfolio. The company is expected to benefit from more wealthy people by pushing up price points to a ‘ridiculous’ level and is immune from the car industry, according to the fund manager.
‘They can even be relaxed about taking their time over deciding where electrification goes, and autonomous driving - because people want to drive their Ferrari rather than anything else,’ he says.
DISCLAIMER: Daniel Coatsworth, who edited this article, owns shares in Scottish Mortgage
