Kering, the French luxury giant that controls brands of the caliber of Gucci, Brioni, Yves Saint Laurent, Balenciaga, Alexander McQueen, Bottega Veneta, Boucheron and Pomellato, presented its 2019 accounts closed with strong growth in revenues and operating margin. Kering ended the fourth quarter with higher-than-expected revenues but warned that the coronavirus outbreak in China could increase uncertainty for the luxury goods market. The spread of the virus, explained the French conglomerate, could have an impact on the "trend of consumption and tourist flows, with possible effects on economic growth".
The group led by François Pinault closed the year with revenues up 16% to 15,8 billion euro. The double-digit growth of the main brands stands out, from Gucci (+16,2% with a gross margin equal to 41% of sales) a Yves Saint Laurent (+17,5% to 2 billion euros), while the other minor brands even recorded a +20,3% driven by Balenciaga and Alexander McQueen. Bottega Veneta is also growing again (+2,2%).
Increasing sales of bags and clothes, but the best result comes from the eyewear sector which marks a rise of 17,8% above half a billion euros.
Turning to the other economic parameters, the ebitda rose 18,3% to 6 billion, with sales up 16,2%, while recurring operating profit which rose 19,6% to 4,78 billion. The net profit it stood at 2,3 billion, down by 37,4%. The figure discounts 1,25 billion in taxes paid in Italy last year following the agreement, reached in May, with the Revenue Agency. In our country, Kering paid taxes for 897 million, a figure that rises to 1,25 billion with penalties and interest. The Guardia di Finanza accused Kering of alleged tax evasion of around 1,4 billion as a result of undeclared revenues of 14,5 billion. Net of these extraordinary components, profit rose by 15,2% to 3,2 billion.
By virtue of the results achieved, Kering will offer shareholders a dividend equal to 11,5 euro per share, up 10% year-over-year and equal to approximately half of net profits.
Francois-Henri Pinault, commented favorably on the year of “strong and profitable growth and with a recurring operating margin that for the first time exceeded the 30 per cent threshold”.
As for the solo fourth quarter, Kering saw revenue climb 13,8% to €4,36 billion (+11,4% on a comparable basis), with Gucci achieving sales of €2,64 billion (+10,5% on a comparable basis ). The market was expecting a like-for-like growth in sales of approximately 8,6% for Gucci.
On the Stock Exchange the shareholders celebrate the result: just a few minutes after the opening, the Kering share gains 3,72% to 583,6 euros.
Updated at 11:29am Wednesday February 12, 2020
