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Kering with sales slowdown

Feb 17, 2021 France
Kering with sales slowdown
Quarterly revenue at the French-based luxury group was down by 4.8% on a comparable basis to 4 billion euros, while sales at Gucci, the main segment of the Kering's revenue, contracted by 10.3% to 2.3 billion euros
"In a year of disruption, Kering demonstrated remarkable resilience and agility. We achieved a solid top-line recovery in the second half, we protected our margins while continuing to invest in our Houses and growth platforms, our cash flow generation remained elevated, and we further strengthened the Group’s financial structure. This year, safeguarding the health and safety of our employees and customers was our first priority. I am grateful for the resourcefulness and commitment of all Kering people (...) We are emerging from the crisis stronger and better positioned to leverage the rebound. We invest in all our brands to maximize their potential, and to resume our profitable growth journey", commented François-Henri Pinault, Chairman and Chief Executive Officer.

The group has reported 2020 consolidated revenue of 13.1 billion euros, down by 17.5% as reported and by 16.4% on a comparable basis. Total revenue generated by Kering’s Houses in the period amounted to 12.7 billion euros, down by 17.6% as reported and by 16.5% on a comparable basis.

While the health crisis and lockdown measures took a heavy toll on the Houses’ first-half sales (down by 30.2%), the situation improved significantly in the second half (down 3.3%), despite new restrictions towards the end of the year in certain regions. In the retail network, comparable sales declined by 15.9% over the year and were nearly stable in the second half (down by 1.5%). E-commerce sales further accelerated (up by 67.5%), accounting for 13% of total sales generated by the retail network in the year. Wholesale revenue was down by 17.4% on a comparable basis, in line with the "group’s strategy to streamline and make this channel more exclusive".

Kering announced operating income of 3.1 billion euros.

In the fourth quarter, total revenue generated by the Houses contracted by 4.8% on a comparable basis, including a 2.9% decrease for the retail network. Recurring operating income for the Houses totaled 3.4 billion in 2020, resulting in a recurring operating margin of 26.6%.

Gucci, which accounted for more than 60% of the group's revenue, posted revenue of 7.4 billion euros in 2020, down by 22.7% as reported and 21.5% on a comparable basis. Sales generated in directly operated stores fell by 19.5% on a comparable basis, with a significant improvement in the second half (down 5.9%). Despite the store closures resulting from the pandemic, Gucci recovered a robust and encouraging sales momentum with local customers, especially in Mainland China, which benefited from repatriation of demand. Online sales continued to enjoy fast-paced growth, up nearly 70% for the year. Wholesale revenue dropped 33.4% based on a comparable basis, reflecting Gucci’s strategy of continuing to enhance its distribution network’s exclusivity. In the fourth quarter, Gucci's revenue was down by 10.3% on a comparable basis, including a 7.5% decrease for the retail network.

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