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Kering announces quarter heavily impacted by Covid-19

Apr 27, 2020 France
Kering announces quarter heavily impacted by Covid-19
The luxury group has announced consolidated revenue in the first quarter of 2020 of 3 203.2 million euros, down by 15.4%, as reported (-16.4% on a comparable basis)
“The Covid-19 pandemic took a heavy toll on our operations in the first quarter. We took immediate action to ensure the safety and well-being of all the Kering people around the world, and of our customers. We also lent our support to the communities in which we are present, helping meet the extraordinary needs generated by this public health crisis, notably among healthcare workers and hospitals. I would also like to address my warmest thanks to all our employees for the unwavering commitment they have shown in this unprecedented context.
After a very promising start to the year for all our Houses, the rapid spread of Covid-19 affected our performance in our main markets. We are working hard on ensuring the continuity and readiness of all our businesses. Adapting our cost base and preserving our cash position are top priorities, implemented at all levels of the group. Our solid financial structure and our agility serve us well in this difficult period. My confidence in Kering’s future lies in the strength and values of our Houses, which will all emerge from this period of uncertainty at the top of their game, as well as in our ability to blend long-term vision with near-term imperatives”, commented François-Henri Pinault, Chairman and Chief Executive Officer.

After a promising start to the year and in an exceptionally challenging environment, Kering posted revenue of 3 203.2 million euros in the first quarter of 2020, down by 15.4% as reported and by 16.4% on a comparable basis.

The main highlights of the first quarter are:
- Gucci presented deep Covid-19 impact despite excellent trends early in the quarter; the segment posted revenue of 1 804.1 million euros in the first quarter of 2020, down by 22.4% as reported and by 23.2% on a comparable basis. Sales from directly operated stores fell by 23.8% against an extremely high first-quarter 2019 comparison basis. Gucci had an excellent start to the year, with double-digit growth in North America in the first two months of the year and another sparkling performance in Western Europe. However, activity levels were hit hard from February onwards due to the House’s strong positions in Asia-Pacific and among Chinese tourists worldwide. Trends in Mainland China are gradually improving since stores began reopening in early March. Wholesale was down by 20.0%, held back in particular by the closure of the Group’s central logistics hub in late March and an increasingly selective distribution;
Yves Saint Laurent reported revenue of 434.6 million euros in the first quarter of 2020 (down by 12.6% as reported and by 13.8% on a comparable basis). This relatively contained decrease can be attributed to the House’s limited exposure to the Asian markets, as well as a good start to the quarter in Western Europe and North America. Retail sales in the directly operated store network were down by 17.6% on a comparable basis, while wholesale dropped by 5.7%; 
- Bottega Veneta posted a revenue increment by 10.3% as reported and by 8.5% on a comparable basis, to 273.7 million euros. Retail sales in directly operated stores remained broadly unchanged (down by 0.9%) despite the exceptionally unfavourable market context. The House’s collections met with resounding success among local customers in North America (up 31.3%) and Western Europe (up 25.4%), but sales were down in Asia-Pacific and Japan. Wholesale was up by a strong 55.1%, benefiting from a very high order book for Spring-Summer 2020 collections against favourable bases of comparison and despite reduced delivery capacity at the end of the period;
Other Houses announced resilient performance from Couture & Leather Goods; significant impact of the public health crisis on Watches & Jewellery. First-quarter revenue from the Other Houses totaled 553.3 million euros, down by 4.1% as reported and by 5.4% on a comparable basis. Sales from the Couture & Leather Goods Division held up well. Balenciaga and Alexander McQueen recorded more favourable trends in their store networks in Western Europe and the United States, nearly offsetting the decline in Asia-Pacific and Japan. Their wholesale was up during the period. The Watches & Jewellery Division has been hit hard by the crisis and revenue was down from last year’s first quarter;
- First-quarter 2020 revenue for the Corporate and other segment remained virtually stable at 137.5 million euros, including 130.1 million euros attributable to Kering Eyewear consolidated sales.

Decisions by the Board of Directors

The Board of Directors of Kering decided that, based on current calendar constraints, the final date of the Annual Meeting of Shareholders will be 16th of June 2020, at 3pm Paris time. Exceptionally, the Annual Meeting will be held behind closed doors.  The Board will ask the Annual Meeting approving the financial statements for the year ended on the 31st of December 2019, to distribute a dividend for that year of 8.00 euros in cash per share, representing a decrease of 30% compared to the dividend initially proposed. An interim dividend of 3.50 euros in cash was paid back in January. Pending approval by the Annual Meeting of Shareholders, the balance of the dividend will be paid on the 25th of June 2020 on positions recorded as of the 24th of June, after market close. The Board of Directors also approved the revised 2020 executive compensation plan, reducing by 25% the fixed remuneration of the Chief Executive Officer and eliminating the variable portion of the 2020 remuneration of the Chief Executive Officer and Deputy Chief Executive Officer. The Board of Directors also decided to reduce Directors’ fees by 30%, thereby maintaining the Board’s total remuneration at the level of prior years notwithstanding the planned increase in the number of Directors.

Image credits: www.fashiongonerogue.com

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