Kering Half-Year Revenue Rises 18.8% to 7,638 Million Euros

The Tip Desk · June 30, 2019 · 2 min read

The luxury group saw strong growth in its Maisons, led by Gucci and a recovery in its other houses.

Kering, the luxury goods group, reported consolidated revenue of 7,638 million euros for the first half of 2019, an increase of 18.8% compared to the first half of 2018. On a comparable basis, accounting for constant perimeter and exchange rates, revenue rose 15.3%. Currency fluctuations provided a positive impact of 192 million euros, including 94 million euros related to the US dollar.

Gucci remained the primary driver of performance, recording a current operating result of 1,876 million euros, up 26.7% from the first half of 2018. The brand's operating margin rose 220 basis points to 40.6%. The company attributed this profitability improvement to a favorable leverage effect, as revenue growth significantly exceeded the increase in operating expenses. Gucci's EBITDA reached 2,106 million euros, representing a margin of 45.6%.

Other Maisons also showed a strong upward trajectory. Revenue for this segment rose 23.1% to 1,225.3 million euros. The current operating result for Other Maisons increased by 49 million euros to 138 million euros. This growth was driven by the rapid expansion of Balenciaga and Alexander McQueen, as well as reduced losses at Boucheron following two years of investment. The segment's operating margin rose 230 basis points to 11.3%.

Yves Saint Laurent reported a current operating result of 252 million euros, a 24.3% increase over the 203 million euros recorded in the first half of 2018. The brand's operating margin rose 80 points to 25 one-point-nine percent. The company stated that Yves Saint Laurent has reached a critical size that allows it to benefit from operational leverage while increasing spending on development.

Across the group, product categories showed varied momentum. Leather goods and jewelry were the most dynamic activities. Footwear sales rose strongly despite high comparison bases and a competitive environment. Ready-to-wear growth remained robust but began to normalize after record levels in 2017 and 2018. In contrast, watch brand activity slowed during the first half of 2019.

Geographically, the contribution of mature countries to revenue fell below 60% to 57.5%. In these markets, activity grew 11.3%, with Western Europe rising 14.0%, Japan increasing 10.3%, and North America growing 7.4%.

Kering's overall current operating result for the first half of 2019 was 2,253 million euros, up 25.3% from the first half of 2018. The group's operating margin rose 1.6 points to 29.5%. Net financial debt stood at 2,135 million euros as of June 30, 2019.

Standard & Poors upgraded Kering's long-term rating from BBB+ with a positive outlook to A- with a stable outlook on April 18, 2019.