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Kering Posts Strong 2019, But Virus Is Bad for Business — Earnings Review

By Cristina Roca


Kering reported 2019 figures on Wednesday. Here's what we watched:


REVENUE: The French luxury-goods conglomerate reported fourth-quarter revenue of 4.36 billion euros ($4.76 billion), up 11% on a comparable basis and bringing revenue for the year up to EUR15.88 billion, in line with analysts' expectations of EUR15.8 billion.


EARNINGS: As expected, net profit for the year fell to EUR2.31 billion from EUR3.71 billion, largely as a result of a large tax settlement. This was in line with analysts' expectations of EUR2.29 billion, according to a FactSet consensus.



--CORONAVIRUS STINGS: Kering's fashion houses grew revenue slightly faster than expected, but their strong run has been interrupted by the coronavirus outbreak, which has hit the company's China business hard. "We have a strong drop in traffic and sales in the last 10 days," said Francois-Henri Pinault, the company's chief executive and controlling shareholder, during an earnings presentation. Half of the group's stores in mainland China are closed. Mr. Pinault said Kering's houses are actively working to offset the hit, with measures including redirecting stock to other regions, changing its production schedules to adjust to the change in demand and postponing promotional spending in China. Kering is also working to boost local demand in European markets to partly compensate for the drop in tourist spending, Mr. Pinault said. Chinese shoppers account for a little more than 30% of Kering's global revenue, according to Kering executives.

--NO M&A PROJECT IN THE WORKS: Kering is open to M&A, but has nothing in the works at the moment, Mr. Pinault said, brushing off recent rumors that the French group was eyeing Italian luxury puffer-jacket maker Moncler.

--GUCCI DELIVERED U.S. REBOUND: Gucci's 4Q revenue grew organically by 6.2% in North America, returning the region to growth after a few weak quarters following controversy over a sweater that critics likened to blackface. This is welcome news, especially given all the uncertainty surrounding China at the moment. Starting in September, Gucci ramped up reinvestment into communications actions including store events, more presence in department stores, and other events, with a special focus on diversity, Kering CFO Jean-Marc Duplaix said during an earnings call.


Write to Cristina Roca at


(END) Dow Jones Newswires

February 12, 2020 07:33 ET (12:33 GMT)

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