Consolidated revenue at Kering for the first half of 2019 amounted to 7,638.4 million euros (8509.7 million dollars), an increase of 18.8 percent as reported and 15.3 percent based on a comparable group structure and exchange rates. However, the luxury conglomerate’s star brand Gucci registered 19.8 percent reported and 16.3 percent growth on comparable basis to 4,617.1 million euros (5,142 million dollars) in the first half. And according to Reuters, brand’s 12.7 percent rise in the second quarter missed analysts’ expectations for 14 percent to 15 percent growth, negatively impacting the company’s share prices on Friday.
“We created an additional 1.2 billion euros in revenue in the six months, and our operating margin reached a record 29.5 percent. Our strategy is clearly paying off,” said François-Henri Pinault, Kering’s Chairman and Chief Executive Officerin a statement.
Kering achieves good growth in the first half
The company said, strong first half growth was driven by all of the group’s geographic regions, with increases of 24.2 percent in Asia-Pacific excluding Japan, 10.2 percent in Japan, 14.8 percent in Western Europe and 7.3 percent in North America.
Total revenue generated by Kering’s Houses amounted to 7,364.4 million euros (8,201 million dollars) in the first half of 2019, up 18.6 percent as reported and 15.2 percent on a comparable basis. The company added that this strong growth – which was achieved despite particularly high bases of comparison – was fuelled by sales from directly operated stores and online up 16.1 percent on a comparable basis, and wholesale up 11.6 percent on a comparable basis, while the Houses’ online sales, which rose 19.7 percent. In the second quarter, the Houses’ revenue rose 13.1 percent, while recurring operating income of the Houses totalled 2,370 million euros in the first six months of 2019, surging 24.1 percent, while recurring operating margin widened by 140 basis points to 32.2 percent.
Kering’s gross margin for the period was 5,652 million euros (6,297 million dollars), up 18.3 percent on the same period of 2018. Recurring operating income amounted to 2,252.7 million euros (2509.8 million dollars), up 25.3 percent versus first-half 2018 and recurring operating margin rose 160 basis points to 29.5 percent. EBITDA rose 19.6 percent to 2,809.3 million euros (3,130 million dollars), while EBITDA margin increased by 30 basis points at 36.8 percent. Net income, group share totalled 579.7 million euros (645.7 million dollars). Earnings per share stood at 4.61 euros and recurring net income, group share totalled 1,556.1 million euros, up 24.7 percent.
Gucci sales progress at a slow speed compared to 2018
Gucci’s sales generated in directly operated stores advanced 16.2 percent on a comparable basis, while wholesale rose 15.8 percent. However, the House’s revenue increased at a slow pace by 12.7 percent on a comparable basis in the second quarter of 2019. Gucci’s recurring operating income amounted to 1,876.1 million euros (2,090 million dollars), up 26.7 percent , while recurring operating margin increased by 220 basis points to a new record of 40.6 percent.
Yves Saint Laurent revenue of 973 million euros (1,084 million dollars) in the first half, up 20.4 percent as reported and 16.6 percent based on comparable data. Sales in directly operated stores were up 19 percent on a comparable basis. All of the brand’s geographic regions recorded double-digit growth in the period, reaching 21.6 percent in North America and 19.4 percent in Western Europe, while comparable sales generated through the wholesale network were up 10.6 percent. Second quarter revenue also rose 15.8 percent on a comparable basis.
Bottega Veneta’s first half revenue retreated 3.8 percent on a comparable basis and 0.6 percent as reported. Revenue generated through the brand’s directly operated stores decreased 4.6 percent, whereas wholesale edged up 0.2 percent on a comparable basis. The second quarter comparable sales were up 0.8 percent.
Revenue for Kering’s Other Houses rose 23.1 percent as reported and 20.3 percent on a comparable basis in the first half reaching 1,225.3 million euros (1,364.2 million dollars). Sales from the directly operated store network of the Other Houses posted comparable growth of 32.3 percent during the period, while the wholesale network saw comparable growth of 9.8 percent. Growth in the second quarter was 19.2 percent on a comparable basis. Recurring operating income of the Group’s Other Houses rose 54.5 percent and recurring operating margin came to 11.3 percent, up 230 basis points year on year. Kering Eyewear’s sales rose to 320.8 million euros and its contribution to the Group’s consolidated revenue rose 20.7 percent on a comparable basis.