Kering posted better-than-expected growth in the fourth quarter, powered by a strong performance in the Asia-Pacific region, and said it was confident about its medium-term prospects despite the uncertainty brought by the coronavirus in China.
Revenue at Kering’s cash-cow brand Gucci rose 10.5% on a comparable basis in the fourth quarter, exceeding consensus estimates for an 8.8% increase. This was broadly stable versus the third quarter, when sales rose 10.7%, and down from 28.1% during the same period a year ago.
Kering, the owner of brands including Saint Laurent, Balenciaga and Bottega Veneta, said group sales were up 13.6% to 4.36 billion euros ($4.74 billion) in the three months to Dec. 31, capping a year when its net profit from continuing operations rose 15.1% to 3.21 billion euros ($3.5 billion).
François-Henri Pinault, chairman and CEO of Kering, expressed confidence the company would weather the impact of the coronavirus in China.
“In the challenging period China is facing right now, we want to express once again our support to all our colleagues and our solidarity with the Chinese people. These particularly uncertain conditions don’t call into question Kering’s fundamentals in the luxury industry,” he said in a statement.
“We are confident in our growth potential in the medium and long term,” Pinault added.
The recurring operating margin rose to 30.1% in 2019, marking the first time it has topped the 30% threshold, after reaching 29.2% in 2018, according to figures restated for the new IFRS 16 accounting rule.
Group revenues in 2019 increased 16.2% year over year to 15.88 billion euros, a notch above sector leader LVMH Moët Hennessy Louis Vuitton, which last month reported a 15% rise in full-year sales.
Kering said its luxury houses put in an “excellent” performance in the Asia-Pacific region, up 20.4% year over year, despite a sharp drop in business in Hong Kong in the second half, as tourism plummeted in response to eight months of violent antigovernment protests.
Western Europe posted double-digit growth each quarter, rising 13.7% over 2019 as a whole, while North America and Japan lagged with growth of 6.7% and 5.9%, respectively.
This story was reported by WWD and originally appeared on WWD.com.