Kering Q2 Sales Rise 15.9% but Gucci Slows Down

Kering registered a 15.9 percent uptick in revenues in the second quarter, with another marked slowdown in organic sales at its star brand Gucci.

Revenues at the Italian label increased by 12.7 percent on a comparable basis in the three months to June 30, below consensus estimates. This was down from 20 percent in the first quarter and from 40.1 percent during the same period a year ago.

However, Gucci’s operating margin rose to 40.4 percent in the first half from 38.2 percent during the same period a year ago, adjusted on the basis of the IAS 17 accounting rule, putting it ahead of schedule in meeting its medium-term target of a 40 percent margin.

The results were the first published since IFRS 16 — an accounting rule that requires companies to record all future lease rents as debt on the balance sheet — came into effect on Jan. 1, superseding IAS 17, and Kering restated some of its 2018 figures accordingly.

However, it applied the previous accounting standard to key indicators such as recurring operating income, EBITDA and free cash flow from operations.

Net profit fell 75 percent in the first half of 2019 as Kering absorbed the impact of its 1.25 billion-euro settlement of Gucci’s tax dispute with Italian authorities in May.

Recurring net profit, which excludes one-off items, was up 24.7 percent to 1.55 billion euros in the first half, while recurring operating income rose 25.3 percent to 2.25 billion euros.

“In the first half of the year, we delivered another very strong set of results,” François-Henri Pinault, chairman and chief executive officer of Kering, said in a statement. “Kering’s revenue growth handily topped market trends, and was highly profitable.”

The numbers come a day after LVMH Moët Hennessy Louis Vuitton reported its revenues rose 15 percent in the second quarter, with sales in its key fashion and leather goods division jumping 20 percent on a like-for-like basis, driven by Louis Vuitton and Dior — the latter growing faster than the division as a whole.

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