Gucci disappoints and Kering bears the brunt. At the Paris Stock Exchange, the action of the luxury specialist plummeted by more than 8% at the opening, investors resent the slowdown in sales of its flagship brand. The locomotive of the group, which had approached 10 billion euros in sales in 2019, has indeed slowed down in 2020, to 7.4 billion euros. The Italian brand “has found a positive and encouraging dynamic with local customers, especially in mainland China, which has benefited from the repatriation of Chinese demand,” Kering believes. But it is clear that Gucci’s sales during the fourth quarter remained down -10.3% (organically) while the two other main brands of the group, Bottega Veneta and Yves Saint Laurent are starting to recover.
The Kering group said it was “ready to take advantage of the recovery” in 2021, after having limited the impact of the crisis on its performance last year thanks to its sales in Asia and North America, even if its flagship brand Gucci is struggling to bounce back. “In a year of upheaval, Kering has shown great resilience and remarkable agility. We come out of the crisis strengthened and ready to take advantage of the recovery,” said the CEO of the group, François-Henri Pinault. , quoted in the press release Wednesday.
>> To read – Did Kering (Gucci, YSL) pay “offshore remuneration” to executives?
The group’s turnover amounted to 13.1 billion euros, down 17.5% as reported, a sales development similar to that of the world number one in luxury LVMH which published at the end of January its annual results. In 2020, François-Henri Pinault’s group saw its net income decline by 6.9% over one year, to 2.15 billion euros, while its current operating margin rose to 23.9% (against 30.1% a year earlier).
Stable dividend over one year
The group – which will offer the payment to shareholders of a dividend of 8 euros per share, ie stable over one year – also highlights its “very solid” financial structure, with free cash flow which is on the rise by 38.4%.
After a start to the year marked by store closures and the cessation of tourist flows, “trends improved in the second half” due to “good momentum in Asia-Pacific and North America” and also “a very strong acceleration of e-commerce of nearly 70%”, greeted the chief financial officer Jean-Marc Duplaix during a conference call.
Online sales represented 13% of the group’s total sales in 2020. Asia Pacific concentrated 38% of sales, although the latter fell by 7% in the region during the year. .
>> To read also – LVMH, Kering … the luxury giants will benefit from growth drivers on the stock market
Yves Saint Laurent, the group’s second brand, saw its sales fall by 13.8% over the year as a whole, but stabilized at + 0.5% over the last three months. As for Bottega Veneta, its turnover increased despite the pandemic, to 4.8%. The Italian brand even saw its sales jump 15.7% in the fourth quarter. “Bottega Veneta, but also Alexander McQueen and Balanciaga are among the few brands which during the year recorded a growth in their sales”, thanks to “their very marked creativity. The reception (of the collections) is excellent in the market, these brands still have growth potential which remains very strong “, underlined Jean-Marc Duplaix.
If the luxury group does not give quantified prospects for 2021, the CFO said he was “satisfied with the start of the year for our brands”. “Asia-Pacific and North America remain ‘supportive’ markets for the luxury industry”, while “the European market remains more difficult given the absence of tourism” in particular, added Mr. Duplaix. Kering believes it benefits from “very solid fundamentals, a balanced portfolio of complementary brands with high potential” as well as “financial strength” which allow it to “consolidate its confidence in its growth potential in the medium and long term” .
>> To read also – LVMH, Kering, Richemont … what do the jewels of luxury have?
–
