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Kering's luxury houses and core markets drive strong revenue growth in 2019

By Prachi Singh

12 Feb 2020

Consolidated revenue at Kering amounted to 15,883.5 million euros (17,321 million dollars) in 2019, up 16.2 percent as reported and 13.3 percent on a comparable basis fuelled by growth across all regions. The company said in a statement, gross margin was 11,775 million euros (12,840 million dollars), up 15.5 percent on 2018, while EBITDA rose 18.3 percent to 6,023.6 million euros (6,568.4 million dollars), with EBITDA margin increase of 60 basis points. 2019 net income totalled 2,308.6 million euros (2,518 million dollars), while net earnings per share mounted to 18.40 euros and recurring net income totalled 3,211.5 million euros (3,502.7 million dollars), up 15.1 percent on 2018.

Commenting on the performance, François-Henri Pinault, the group’s Chairman and Chief Executive Officer, said: “Kering delivered another year of sustained profitable growth in 2019, as total revenues significantly exceeded the 15-billion-euro mark and our recurring operating margin topped 30 percent for the first time ever. In the challenging period China is facing right now, we are confident in our growth potential in the medium and long term.”

Kering’s luxury houses post double-digit growth

In 2019, Kering’s luxury houses delivered double-digit growth in both revenue and recurring operating income. Over the year, total revenue from the luxury houses topped the 15-billion euro mark, coming in at 15,382.6 million euros (16,785.4 million dollars), up 16.1 percent as reported and 13.2 percent on a comparable basis. The company said, sales in directly operated stores and online advanced 14 percent on a comparable basis, propelled by very strong performances from Gucci, Yves Saint Laurent, Balenciaga and Alexander McQueen, while online sales surged 22.6 percent year on year. Wholesale revenue from the group’s houses rose 10.4 percent on a comparable basis.

The luxury houses witnessed 20.4 percent growth in the Asia-Pacific region despite political tensions and disruptions in Hong Kong in the second half of 2019, which impacted the group’s business. Western Europe posted double-digit growth each quarter, with an overall progression of 13.7 percent over the year, while North America and Japan were up 6.7 percent and 5.9 percent, respectively. Total revenue posted by the luxury houses in the fourth quarter of 2019 rose 11.6 percent on a comparable basis. The directly operated store network continued on a strong uptrend, with comparable sales up 12.3 percent over the quarter, up double digits in all regions except Japan, which felt the impact of the increase in sales tax.

Recurring operating income of the Luxury Houses totalled 5,042 million euros (5,502 million dollars) in 2019, up 19 percent over 2018, while operating margin stood at 32.8 percent, up 0.8 percentage points.

Gucci, Yves Saint Laurent and Bottega Veneta confirm positive momentum

Gucci, the company added, generated an additional 1.3 billion in sales compared to 2018, with 2019 revenue at 9,628.4 million euros (10,506.6 million dollars), up 16.2 percent as reported and 13.3 percent on a comparable basis. Growth in directly operated stores and online advanced 13.2 percent on a comparable basis. The Asia-Pacific region posted comparable sales surge of 22.4 percent and Western Europe saw an increase of 12.9 percent, while wholesale climbed 13.4percent, on a comparable basis. In the fourth quarter, revenues rose 10.5 percent fuelled by the brand’s growth momentum across regions and product categories. North America posted comparable revenue growth of 6.2 percent on a comparable basis in the last three months of 2019 in directly operated stores.

With revenue in 2019 advancing to 2,049.1 million euros (2,235.8 million dollars), up 17.5 percent as reported and 14.4 percent on a comparable basis, Yves Saint Laurent reported rise in revenue from directly operated stores and online of 15.7 percent, on a comparable basis. All regions reported very strong growth, with 23.1 percent rise in North America, 16.8 percent in Western Europe and 13.2 percent in Asia-Pacific. Wholesale increased 10.6 percent on a comparable basis. The house posted revenue rise of 14 percent in the fourth quarter on a comparable basis thanks to strong performances in Western Europe and North America.

Bottega Veneta generated revenue of 1,167.6 million euros (1,274 million dollars) in 2019, up 2.2 percent on a comparable basis and 5.3 percent as reported. After a mixed performance in the first half of the year, revenue swung up 8.2 percent in the second half due to positive reception given to Daniel Lee’s new collections. Sales from directly operated stores in mature markets enjoyed particularly good momentum, with Western Europe and North America up 7.4 percent and 5.7 percent, respectively, on a comparable basis. Comparable sales generated through the wholesale network increased 6.8 percent. Bottega Veneta sales advanced 9.4 percent in the fourth quarter driven by strong momentum in both retail and wholesale channels.

Revenue generated by Kering’s Other Houses totalled 2,537.5 million euros (2,769.4 million dollars) in 2019, up 20.3 percent as reported and 17.8 percent on a comparable basis led by Balenciaga and Alexander McQueen, which both recorded sustained sales growth throughout the year. Sales in the directly operated store network rose a strong 28.7 percent on a comparable basis, while wholesale rose 7.4 percent on a comparable basis. In the fourth quarter, revenue of the group’s other houses rose 17.2 percent as reported and 14.9 percent on a comparable basis.

The “corporate and other” segment reported 2019 revenue of 500.9 million euros (546.6 million dollars), reflecting strong momentum at Kering Eyewear, up 18.2 percent on a comparable basis, which contributed 474 million euros to consolidated revenue after eliminating intra-group sales and royalties paid to the group’s houses

The group’s board of directors has proposed 11.50 euros (12.55 dollars) per-share cash dividend for 2019. An interim cash dividend of 3.50 euros (3.82 dollars) per share was paid on January 16, 2020.

Picture:Spring/Summer 2020 campaign shot via Gucci website