Core Viewpoint - The future of Kendo, the beauty incubator under LVMH, is uncertain as the group considers selling its 50% stake in Fenty Beauty, which has become a significant part of Kendo's identity and success [1][4][5] Group 1: Kendo's Background and Success - Kendo was established in 2010 as a spin-off from Sephora Originals and has successfully incubated several notable beauty brands, including Fenty Beauty, which was co-founded with Rihanna in 2017 [2][4] - Kendo's incubator model provided essential brand-building tools for emerging beauty brands, ensuring their products were featured in Sephora, a leading beauty retailer [2][4] Group 2: Current Challenges and Market Dynamics - Kendo has faced challenges, including the sale of KVD Beauty and the expiration of the Marc Jacobs Beauty brand license, leaving Fenty Beauty and Ole Henriksen as its only remaining brands [5][8] - Fenty Beauty's sales have plateaued, with 2023 revenue reaching $750 million (approximately 5.34 billion RMB), and there are concerns about declining consumer interest and product quality [8][10] - LVMH's overall perfume and cosmetics sales fell by 2% to $6.9 billion (approximately 49.1 billion RMB) in the first nine months of 2023, indicating broader market challenges [8] Group 3: The Decline of the Incubator Model - The beauty incubator model, once thriving, is now facing decline, with competitors like Amyris and Forma Brands filing for bankruptcy in 2023 [9][11] - The typical exit timeline for incubator-supported beauty brands has extended from 3-5 years to approximately 5-8 years, reflecting increased market competition and challenges [9][12] - Successful incubators today demonstrate the ability to pivot quickly, contrasting with Kendo's slower, more traditional approach, which may have hindered its growth potential [10][12] Group 4: Future Outlook - If LVMH can sell Fenty Beauty for a valuation of $2 billion (approximately 14.2 billion RMB), it could signal a viable path for incubators to achieve higher returns through long-term brand development [12][13] - The fate of Kendo may determine the future of the beauty incubator model, as the industry grapples with rapid changes and increasing competition [13]