PARIS (Agefi-Dow Jones)–The luxury group Kering reported on Thursday an acceleration in its organic growth in the fourth quarter, driven by its flagship brand Gucci, which returned to levels of growth and profitability close to those of its before the health crisis.
The title gained 6.7%, to 674.70 euros, at midday, while analysts at Jefferies and Bryan, Garnier & Co. judge this publication “reassuring”.
The turnover of the owner of Gucci, Yves Saint Laurent and Bottega Venetta stood at 5.41 billion euros in the fourth quarter, up 31.9% compared to the same period of 2020, on a comparable basis. It significantly exceeded analysts’ expectations, which on average had forecast revenue of 4.85 billion euros, according to FactSet.
Gucci’s growth, which had slowed in the third quarter due in particular to a lack of new products, accelerated sharply in the fourth quarter, to 31.6% over one year. It benefited from the launch of new products and a 35% increase in sales in the directly owned store network.
Gucci narrowed the growth gap with its main competitors in the fourth quarter, which is a positive sign, but it is still too early to say whether this portends a new chapter for the brand, commented Citi analysts.
Over the past year as a whole, Gucci’s sales exceeded its 2019 level by 10%, at 9.73 billion euros, and its operating margin was 38.2%, compared to 41% in 2019. Bernstein notes that this is the best margin in the sector.
For Kering’s chief financial officer, Jean-Pierre Duplaix, this performance is all the more remarkable as the brand has invested heavily in marketing on the occasion of its centenary in 2021 and has almost completed the restructuring of its wholesale distribution network. (“wholesale”). “At the group level, we should have compensated by 2022 what we will have lost in wholesale, even if the other brands will continue this rationalization”, he specified during a conference call.
Double-digit growth in all divisions
Over the full year 2021, Kering’s sales increased by 35.2% at constant exchange rates and perimeter, to 17.65 billion euros, and exceeded its level of 2019.
Apart from Gucci, growth was fueled by all divisions. Yves Saint Laurent saw its sales jump 46% in the past year to 2.52 billion euros, while those of Bottega Veneta rose 25% to 1.5 billion euros, in comparable data. The “Other Maisons” branch, which notably includes Balenciaga, AlexanderMcQueen and the jewelers Pomellato and Boucheron, generated 1 billion euros in additional turnover compared to 2020, at 3.26 billion euros.
In 2021, Kering’s current operating income (COI) stood at 5.02 billion euros, against 3.14 billion euros a year earlier, an increase of 60%. Current operating margin increased to 28.4% from 23.9% in 2020.
Net profit rose to 3.18 billion euros last year, from 2.15 billion euros in 2020.
According to a consensus established by FactSet, analysts on average expected a net profit of 3.20 billion euros, a current operating profit of 4.81 billion euros and a turnover of 17.15 billion euros. for Kering in 2021.
The group remains on the lookout for acquisitions
In terms of the balance sheet, Kering generated operating free cash flow of 3.94 billion euros in 2021 and has significantly reduced its debt. As of December 31, the group’s net debt stood at 168 million euros, against 2.15 billion euros a year earlier.
Given this solid financial situation, the group has indicated that it will pay a dividend of 12 euros per share for the 2021 financial year, up 50% compared to the previous year. Kering Chairman and CEO Francois-Henri Pinault clarified in a conference call with analysts that Kering could also carry out share buybacks “tactically”.
Asked about possible mergers and acquisitions, the manager said that the group was “always looking for opportunities” to complete its portfolio, the latter being “not perfect”.
Kering announced at the beginning of the year the sale of its watch brands Girard-Perregaux and Ulysse Nardin and does not wish to strengthen itself in watches, he added.
-Francois Schott, Agefi-Dow Jones; +33 (0)1 41 27 47 92; [email protected] ed: VLV – LBO
KERING FINANCIAL RELEASES:
http://www.kering.com/fr/finance
Agefi-Dow Jones The financial newswire
Dow Jones Newswires
February 17, 2022 06:30 ET (11:30 GMT)