Kering grows 16% but profit plummets by 37.4% in 2019 due to extraordinary gain
The decline is due to the agreement reached with the Italian tax agency and the 1.18 billion euros in extraordinary grain recorded in 2018 for the sale of Puma.
Kering ends 2019 with a bittersweet feeling. The French luxury holding, owner of Gucci and Balenciaga, has ended the 2019 fiscal year with a growth of 16.2%, though its revenue has plummeted by 37.4%, according to data made public today.
The drop in its net income is mainly due to the agreement reached last May with the Italian Treasury, which resulted in the group paying 1.25 billion euros (1.4 billion dollars). In addition, in 2018 the company had an extraordinary gain of 1.2 billion euros (1.3 billion dollars) from the sale of Puma.
Discounting mentioned extraordinaries, Kering’s profit rose 15.1%, to 3.21 billion euros (3.5 billion dollars). The ebitda increased by 18.3%, to 6 billion euros (6.5 billion dollars), and the margin of recurring operations exceeded 30% for the first time.
For the first time, the group has exceeded 15 billion euros (16 billion dollars) in revenue, after growing 16.2% in the last year. The company recorded a revenue of 15.9 million euros (17.4billion dollars), compared to 13.7 million euros (14.95 billion dollars) the previous year.
For the first time, the group has exceeded 15 billion euros (16 billion dollars) in revenue
In reference to the coronavirus crisis, François-Henri Pinault, president and CEO of Kering, said that “these particularly uncertain conditions don’t call into question Kering’s fundamentals in the Luxury industry.”
By brands, Gucci continued to show robust growth, up 16.2% in 2019, to 9.6 billion euros (10.5 billion dollars). Yves Saint Laurent, meanwhile, raised its sales by 17.5%, and Bottega Veneta returned to the path of growth following the signing in 2018 of Daniel Lee as CEO. The company grew reported a growth change of 5.3% and grew 2.2% in comparable terms. Nevertheless, Bottega Veneta was the only company in the group that shrunk its operating profit, with a drop of 14.3%, to 215.2 million euros (234.9 million dollars). In parallel, the other brands of the group saw a growth of 20.3% thanks to the growth of Balenciaga and Alexander McQueen.
Online sales, meanwhile, skyrocketed 22.6%, although the company does disclose its share in total revenue. In whole revenue through the multi-brand channel rose 10.4% in comparable terms, while those of the group’s own services increased by 14% thanks to the boost of Gucci, Yves Saint Laurent, Balenciaga, and Alexander McQueen.
Asia Pacific was once again the powerhouse of the group, up 20.4%, despite “disruptions in Hong Kong in the second half of 2019, which impacted the Group’s business,” explains Kering. In Western Europe, the company posted double-digit each quarter, with a year-end increase of 13.7%. However, growths were more moderate in North America and Japan, with an increase of 6.7% and 5.9%, respectively.
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