The Wall Street Journal - 08.11.2019

B6| Friday, November 8, 2019 THE WALL STREET JOURNAL.

lies on its lines of handbags,

which can retail for more than

$10,000 each. LVMH, Kering

and Hermès occupy three of

the top seven spots by market

cap on the CAC-40, France’s

main stock index, ahead of

BNP Paribas, France’s largest

bank, and AXA SA, the coun-

try’s largest insurer.

The industry’s good for-

tunes have been far from

evenly distributed. Outside

those three, high-end fashion

companies such asPradaSpA

andBurberry GroupPLC have

struggled to rejuvenate their

brands. The fashion conglom-

erates appear to have gained

an advantage compared with

single-brand houses because

their labels can share know-

how and pool costs in areas

such as marketing, logistics

and real estate.

LVMH has been by far the

luxury industry’s best per-

former this year, with its

shares up nearly 60%. Revenue

rose 16% in the first nine

months of the year, as LVMH

brushed aside threats from

protests in Hong Kong and

trade tensions between Beijing

and Washington. The share-

price increase has put LVMH’s

market cap on par withCoca-

ColaCo. andBoeingCo.

and capable of buying luxury

goods, LVMH is in a great po-

sition,” said Luca Solca, an an-

alyst at Bernstein & Co.

Kering has been powered

by Gucci, one of the hottest

brands in fashion over the

past three years. Hermès re-

Continued from page B1

LVMH’s

Market Cap

Rides High

BUSINESS WATCH

SIEMENS

Executive Tapped for

IT, Digital Products

Hanna Hennig, the incoming

chief information officer atSie-

mensAG, will help lead the in-

dustrial conglomerate’s digital

transformation and ensure a

smooth information-technology

transition for the spinoff of its

power and gas business, the

company said.

Ms. Hennig, chief information

officer at lighting maker Osram

Licht AG, will start in January,

managing about 2,400 employ-

ees. Osram is a former unit of

Munich-based Siemens. She suc-

ceeds Helmuth Ludwig, who has

worked at Siemens for about 30

years.

Ms. Hennig will be in charge

of the company’s IT operations

and will continue the rollout of

products including MindSphere,

an Internet-of-Things platform

developed in house to collect

and analyze data from its opera-

tions and those of client compa-

nies.

—Agam Shah

DISCOVERY

Profit Soars Amid

Pivot to Streaming

DiscoveryInc. said its third-

quarter profit more than doubled

thanks to lower costs, higher op-

erating results and advertising

growth, as the company turns

its efforts to building direct-to-

consumer streaming services.

Net income at Discovery,

whose channels include Food

Network, TLC and HGTV, was

$262 million, or 35 cents a share,

compared with $117 million, or

16 cents a share, a year earlier.

The sharp increase resulted

partly from lower restructuring

costs compared with a year ago,

when Discovery was reorganizing

after its $11.9 billion purchase of

lifestyle TV company Scripps

Networks Interactive.

Discovery said earnings per

share on an adjusted basis were

87 cents, beating analysts’ con-

sensus of 82 cents.

Revenue grew 3.3% to $2.68

billion. U.S. advertising revenue

rose 2.8% to $1.02 billion.

—Benjamin Mullin

SEAWORLD ENTERTAINMENT

Timeshare Expert

Gets CEO Post

SeaWorld EntertainmentInc.

has tapped a timeshare resort

executive as its new CEO.

The theme-park company,

which runs SeaWorld and Busch

Gardens, on Thursday named

Sergio Rivera, former president

and chief executive of ILG Inc.’s

vacation-ownership segment, as

its new leader.

Gustavo Antorcha resigned as

SeaWorld CEO in September,

seven months after taking the

helm at the company. Finance

Chief Marc Swanson is now the

interim chief executive.

Mr. Rivera took the helm of

ILG’s timeshare business in 2016.

Before that, he worked for Star-

wood Hotels & Resorts World-

wide Inc. as president of its

Americas division. In a call with

analysts, Mr. Rivera said Sea-

World has made progress. “But

we know there’s a lot more to

do to unlock the long-term po-

tential of this business,” he said.

—Dave Sebastian

BUSINESS NEWS

profit for its fiscal second

quarter. Net income was

$182.1 million in the three

months to Sept. 28, up from

$170.3 million a year earlier.

The profit growth was driven

by higher gross margin and

expense control.

Revenue was $1.71 billion,

compared with $1.69 billion a

year earlier. North American

sales fell 1%, dragged down by

a 6% decline in sales to third

parties such as department

stores. The company lowered

its full-year fiscal guidance

slightly, in part due to the pro-

tests in Hong Kong. Stores in

the territory were closed for

48 days in the most recent pe-

riod because of the unrest.

Ralph Lauren executives

said they have mitigated the

impact of tariffs by reducing

the amount of Chinese goods

that they import to the U.S.

Ralph LaurenCorp. posted
higher quarterly profit as the
luxury apparel maker pushes
through price increases, help-
ing offset some of the rising
costs due to tariffs on prod-
ucts imported from China.
The Polo maker has been
pulling back on promotions
and increasing prices in Asia
and Europe. On a conference
call Thursday, Chief Executive
Patrice Louvet said the com-
pany began raising prices
slightly at its North American
outlet stores in late September
and plans targeted price in-
creases with its wholesale
partners and at its own full-
line stores starting with its
spring 2020 assortments.
Shares jumped nearly 15%
Thursday after the company
reported higher-than-expected

BYSUZANNEKAPNER

Price Boosts Push Ralph Lauren Results

Stores in Hong Kong were closed for 48 days in the second quarter because of the protests in the territory.

PAUL YEUNG/BLOOMBERG NEWS

U.S. to China, India and the

U.K., according to the people

familiar with the deal. Until

PIF made its investment, the

company was funded with

$200 million from Mr. Kalan-

ick himself, using proceeds

from sales of Uber shares, one

of the people said. He added

another $100 million in Janu-

ary, bringing the company’s

total to $700 million with the

Saudi cash, the person said.

A spokesman for PIF de-

clined to comment.

Mr. Kalanick is familiar

with food delivery from his

time as chief executive at

Uber, which has its own food-

delivery service, Uber Eats,

that works with CloudKitch-

ens. He remains a director on

Uber’s board, along with Yasir

al-Rumayyan, PIF’s governor.

Mr. Rumayyan spearheaded

a $3.5 billion investment into

Uber in a 2016 funding round

that also gave Mr. Kalanick the

right to appoint three more

board members. A year later,

when Uber faced scandals over

its culture and operations, a

group of investors pushed out

Mr. Kalanick as CEO. But Mr.

Rumayyan remained his

backer.

The pair had discussed a

potential deal for PIF to back

CloudKitchens since the spring

of 2018, said a person familiar

with the discussions. In Octo-

ber 2018, Mr. Kalanick at-

Continued from page B1

Deal Values

Startup at

$5 Billion

tended the annual Future In-

vestment Initiative conference

held in Riyadh weeks after Mr.

Khashoggi’s killing, which

prompted many others to boy-

cott the summit. The event

was sponsored by Saudi

Crown Prince Mohammed bin

Salman, who U.S. intelligence

officials later concluded had

ordered the murder, which

Saudi Arabia denies. The in-

vestment was completed three

months later.

The Saudi investment has

been known only to a handful

of CloudKitchens executives,

according to the people famil-

iar with the deal. Startups are

usually funded by venture-cap-

ital firms, and those invest-

ments are public. PIF already

backs one of CloudKitchens’s

top rivals indirectly through

SoftBank Group Corp.’s Vision

Fund, which counts PIF as its

largest backer. That company,

Reef Technology, puts com-

missary kitchens mostly in

parking lots to help the own-

ers squeeze out additional rev-

enue from unused parking

spots. Reef received more than

$1 billion in debt and equity

funding from investors led by

the Vision Fund in 2018 and

2019, according to people fa-

miliar with the deal.

The Saudi investment in

CloudKitchens also tips the

scales as one of the largest-

ever first-time investments in

a startup by an institution,

sometimes referred to as a

“Series A” investment.

—Eliot Brown and Summer

Said contributed to this

article.

Firm Gobbles Up

Space for Delivery

Travis Kalanick had a front-

row seat to the food-delivery

boom while chief executive at

Uber TechnologiesInc., thanks

to its Uber Eats unit. For his

next act, he is trying to capi-

talize on it through real estate.

With CloudKitchens, he is

buying up cheap properties

around the world. The hope is

that their proximity to densely

populated areas makes them

candidates for commissary

kitchens that can provide food

exclusively for delivery, or even

mini-warehouses for products

people will pay to have deliv-

ered quickly.

The tenants renting the

space might be chefs who

want to test a food concept

but don’t want to lay out capi-

tal or risk opening a restaurant.

Ghost kitchens, as they are

known, may also appeal to ex-

isting restaurants that want

more capacity to prepare food

or make delivery available fur-

ther from their locations.

Mr. Kalanick has kept many

aspects of CloudKitchens a se-

cret. He forbids employees to

list their affiliation in LinkedIn

profiles. The parent company, a

limited liability company,

doesn’t advertise its locations.

Mr. Kalanick’s venture has

acquired competitors including

London-based FoodStars BH

Ltd., according to U.K. regula-

tory filings. Some U.S. locations

the company has opened are in

“opportunity zones,” distressed

areas to which the federal gov-

ernment is seeking to attract

capital by offering tax benefits

for qualified investments.

   

 



     





     

    

  

   



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