Kering Posts Strong 2019, But Virus Is Bad for Business -- Earnings Review
12 Febbraio 2020 - 1:48PM
Dow Jones News
By Cristina Roca
Kering reported 2019 figures on Wednesday. Here's what we
watched:
REVENUE: The French luxury-goods conglomerate reported
fourth-quarter revenue of 4.36 billion euros ($4.76 billion), up
11% on a comparable basis and bringing revenue for the year up to
EUR15.88 billion, in line with analysts' expectations of EUR15.8
billion.
EARNINGS: As expected, net profit for the year fell to EUR2.31
billion from EUR3.71 billion, largely as a result of a large tax
settlement. This was in line with analysts' expectations of EUR2.29
billion, according to a FactSet consensus.
WHAT WE WATCHED:
--CORONAVIRUS STINGS: Kering's fashion houses grew revenue
slightly faster than expected, but their strong run has been
interrupted by the coronavirus outbreak, which has hit the
company's China business hard. "We have a strong drop in traffic
and sales in the last 10 days," said Francois-Henri Pinault, the
company's chief executive and controlling shareholder, during an
earnings presentation. Half of the group's stores in mainland China
are closed. Mr. Pinault said Kering's houses are actively working
to offset the hit, with measures including redirecting stock to
other regions, changing its production schedules to adjust to the
change in demand and postponing promotional spending in China.
Kering is also working to boost local demand in European markets to
partly compensate for the drop in tourist spending, Mr. Pinault
said. Chinese shoppers account for a little more than 30% of
Kering's global revenue, according to Kering executives.
--NO M&A PROJECT IN THE WORKS: Kering is open to M&A,
but has nothing in the works at the moment, Mr. Pinault said,
brushing off recent rumors that the French group was eyeing Italian
luxury puffer-jacket maker Moncler.
--GUCCI DELIVERED U.S. REBOUND: Gucci's 4Q revenue grew
organically by 6.2% in North America, returning the region to
growth after a few weak quarters following controversy over a
sweater that critics likened to blackface. This is welcome news,
especially given all the uncertainty surrounding China at the
moment. Starting in September, Gucci ramped up reinvestment into
communications actions including store events, more presence in
department stores, and other events, with a special focus on
diversity, Kering CFO Jean-Marc Duplaix said during an earnings
call.
Write to Cristina Roca at cristina.roca@dowjones.com
(END) Dow Jones Newswires
February 12, 2020 07:33 ET (12:33 GMT)
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