Kering Sales Rose 24.5% in Q4 as Gucci Growth Normalized

Kering maintained strong momentum in the fourth quarter, with revenues rising 24.5 percent even as the French luxury group’s cash cow brand, Gucci, saw organic sales normalize slightly after seven consecutive quarters of growth exceeding 35 percent.

Revenues at Gucci topped 8 billion euros ($9.04 billion) in 2018, cementing its status as one of the world’s leading luxury brands, hot on the tail of Chanel and Louis Vuitton. Organic sales at the Italian brand rose 28.1 percent in the fourth quarter against high comparables, versus the 35.1 percent jump recorded in the previous quarter.

Kering, the owner of brands including Saint Laurent, Balenciaga and Alexander McQueen, said group sales totaled 3.8 billion euros in the three months to Dec. 31, capping a year that saw its net profit from continuing operations jump 49.3 percent to 2.8 billion euros. Group revenues in 2018 increased 26.3 percent year-on-year to 13.7 billion euros, outperforming sector leader LVMH Moët Hennessy Louis Vuitton, which last month reported a 10 percent full-year sales rise.

François-Henri Pinault, chairman and CEO of Kering, said it was an “excellent” year for the group, noting it generated 2.8 billion euros in incremental revenues and 1.3 billion euros in additional earnings before interest and taxes, compared with 2017.

“Once again, we significantly outperformed our sector,” Pinault said in a statement. “Having worked throughout the year to strengthen the group and its brands, we have the ambition and the means to sustain our profitable growth momentum.”

Looking ahead to 2019, the group cautioned that its “operating environment remains unsettled with regards to the macroeconomic and geopolitical uncertainties, national trade policies and fluctuations in exchange rates — events that could impact consumer trends and tourism.”

Regarding claims by Italian tax authorities that Kering owes them an estimated 1.4 billion euros in unpaid back taxes, the group reiterated that it does not have the necessary information to record a specific accounting provision based on a reliable estimate of the tax exposure.

“Kering contests the findings of the audit report in terms of both substance and amount. The group is confident about the proceedings currently underway and will continue to fully cooperate with the Italian tax authorities in complete transparency in order to defend all of its rights,” it said.

All regions contributed to the momentum at Kering’s luxury houses, which posted organic growth of 29.1 percent in 2018. Revenues in Asia-Pacific were up 34.1 percent on a comparable basis, North America rose 37.3 percent, Japan recorded 23.7 percent growth, and Western Europe was up 23 percent.

In the fourth quarter, Saint Laurent posted a 19.4 percent rise in organic sales, while Bottega Veneta saw a 3.2 percent decline as it prepares for its first show by new creative director Daniel Lee during Milan Fashion Week. Other Houses, a division that includes Balenciaga and McQueen, saw sales jump 25.5 percent in the quarter.

The company will propose a cash dividend of 10.5 euros per share at its annual general meeting to be held on April 24. This compares with a dividend of 6 euros per share for the 2017 financial year.

This story was reported by WWD and originally appeared on WWD.com.

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