Gucci grabs limelight in bright Kering results

PARIS: French luxury group Kering still has plenty of spring in its step despite cutting loose sneaker brand Puma, with Gucci grabbing the financial glamour with a profit margin nearing 40 percent.

With the Stella McCartney, Volcom and Christopher Kane brands also off the books, the group saw sales soar 26.3 percent to 13.66 billion euros ($15.4 billion) last year.

Meanwhile, net profits surged 49.3 percent to 2.8 billion euros, in line expectations of analysts surveyed by Factset and Bloomberg.

Chairman and Chief Executive Officer Francois-Henri Pinault called 2018 “an excellent year for Kering”, noting that “once again, we significantly outperformed our sector”.

Operating profits hit a record 4.4 billion euros, which is nearly double the level of two years ago, said Chief Financial Officer Jean-Marc Duplaix.

Gucci was a main driver, with sales rising by a third to over 8 billion euros and operating profits jumping 54 percent to to nearly 3.3 billion euros. That means over four euros out of ten brought in by the label is operating profit.

The Yves Saint Laurent label also posted strong sales growth of 16 percent, while Bottega Veneta sales slipped 3.6 percent as the house reboots with a new creative director.

The other houses unit, which includes brands such as Balenciaga and Alexander McQueen, posted a 43.6 percent increase in sales, while the eyewear unit also turned in a similar performance.

Kering distributed its holding in Puma to shareholders last year to focus on luxury brands, but the leaping-cat brand still brought in most of the nearly 1.1 billion euros in profit from discontinued activities.

On a regional basis, North America booked the biggest growth in sales at 37 percent, followed by a 34 percent rise in the Asia-Pacific region.

While there is increasing concern about the Chinese economy slowing, Kering “didn’t notice a slowdown in Chinese consumption in the fourth quarter,” said Duplaix.

He said sales in the Asia-Pacific region overall were up 28 percent in the quarter, and “mainland China was even better than that, with very high growth levels”.

However Kering did note that that the “operating environment remains unsettled with regards to the macroeconomic and geopolitical uncertainties, national trade policies, and fluctuations in exchange rates, events that could impact consumer trends and tourism”.

Kering shares fell 2.3 percent in morning trading on the Paris stock exchange, while the blue-chip CAC 40 index was up 0.7 percent.

[source_without_link]Agence France-Presse[/source_without_link]

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