Kering Net Profits Jump 16.9% to $900 Million

Kering said net profits jumped 16.9 percent in 2016 as revenues accelerated in the second half, driven by the strong performance of its Gucci and Yves Saint Laurent brands.

The French conglomerate – whose stable also includes Balenciaga, Boucheron and Puma – posted sales of 12.38 billion euros, or $13.7 billion, in the full year, representing a rise of 6.9 percent in reported terms and of 8.1 percent on a comparable basis. The group said this was its strongest year-on-year increase since 2012.

It registered net profits of 813.5 million euros, or $900 million. Recurring operating income rose 14.5 percent to a record high of 1.89 billion euros, or $2.09 billion, beating analysts’ expectations.

For the year ahead, Kering said it would continue to focus on organic growth with a targeted store expansion plan and efforts to double bolster its operating margins.

“In a sector undergoing far-reaching transformation, our foresight and the quality of execution of our strategy enabled us to outperform our peers and deliver outstanding operating and financial performances,” Kering Chairman and Chief Executive Officer François-Henri Pinault said in a statement.

“In 2017, in an uncertain macroeconomic and geopolitical environment, we will keep concentrating on the organic growth of our houses and on value creation, so as to intensify our current momentum,” he added.

Kering reported sales of 3.51 billion euros, or $3.78 billion, in the fourth quarter, up 10.4 percent at comparable exchange rates. Luxury activities posted organic growth of 11.3 percent and the sports and lifestyle division registered a rise of 8.6 percent.

Gucci maintained its strong momentum in the quarter, with revenues rising 21.4 percent at constant exchange rates to 1.34 billion euros, or $1.45 billion, thanks to continued strong appetite for the designs of creative director Alessandro Michele.

Yves Saint Laurent was up 20.5 percent to 346.2 million euros, or $373.4 million, with sales in directly operated stores up 32.6 percent in the period, fueled by growth in Western Europe, Asia-Pacific and North America.

Bottega Veneta continued to lag, with revenues down 8.6 percent to 308.4 million euros, or $332.6 million, although Kering noted that it posted a less marked decline in sales in directly operated stores as tourist numbers started to pick up toward the end of the year, particularly in Western Europe.

All dollar rates are calculated at average exchange rates for the period in question.

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