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Research Tree provides access to ongoing research coverage, media content and regulatory news on Kering. We currently have 9 research reports from 1 professional analysts.
Group sales were up 24.6% lfl (+25.4% reported) to €3,722m in Q2, bringing H1 sales to €7,296m (+26.5% lfl). Luxury sales surged by 25.3% lfl to €2,614m and Sports revenue edged up by 14.7% to €1,022m in Q2. H1 luxury sales amounted to €5,031m (+28.3% lfl), followed by sports revenue of €2,086m (+14.3% lfl). A sharp jump in margins was reported in H1. The recurring operating margin rose 330bp to 17.5% with a recurring operating profit of €1,274m (+57%). The two product categories experienced a sharp increase in margins mainly with Gucci, YSL and Puma. Recurring operating income from luxury products soared by 49.4% to €1,254m. Sports & Lifestyle generated a recurring operating income of €110m (+128.7%). Group net income surged by 77.6% to €825.8m. The financial position is improving with net debt decreasing by 9.8% to €4,572m. FCF from operations has more than doubled to €718m.
The Gucci owner impressed with sharp quarterly growth acceleration in Q1. In fact, sales soared by 28.6% lfl (+31.2% reported) to €3,573m. A favourable comparable basis has helped deliver such a striking performance as sales growth in Q1 16 slowed down to 4% lfl. The outperformance was driven by increasing volumes and rising traffic across regions. The climb in Chinese demand, the recovery in Russia and the dynamic tourism in UK have pulled up the group’s performance to its highest in four years (on a sequential basis). Both retail and wholesale channels accelerated. Online sales jumped 60.1% on a comparable basis. Luxury activities were up 31.6% lfl to €2,417m and Sports edged up 14% lfl to reach €1,064m. As regards brands, Gucci was the best performer growing by 48.3% lfl to €1,354m. YSL maintained its pace of growth and increased by 33.4% lfl to €364.4m. The first collections of Vaccarello were well received in stores in January. Bottega has finally marked its upturn with a low single-digit growth of 2.3% lfl to €280.4m. Other luxury brands were up 12.3% to €418m. For Sports & Lifestyle, the repositioning of PUMA is still delivering double-digit organic growth with a 15.3% lfl sales increase to €1,009m. Although, other brands are struggling (-6.3% lfl). As regards geographies, Kering experienced strong momentum in almost all regions. The sound recovery in China raised comparable sales in Asia Pacific by 42%. The weakening pound has buoyed up revenue in the UK and enhanced sales in Western Europe (+34%). In North America, the pace of growth was softer at 25% lfl. The momentum in Japan is challenging and sales were up 1%.
Kering posted a double-digit growth rate in Q4 with sales edging up by 10.4% lfl to €3,507m. Luxury revenue surged by 11.3% lfl to €2,477m, underpinned by outperformance at Gucci and YSL (+21.4% and 20.5% respectively). Puma performed well and grew by 9.8%, raising Sports & lifestyle sales to €1,022m (+8.6% lfl). Full-year sales were up 8.1% lfl (+6.9% reported) to €12,385m. Luxury sales stepped up 7.8% lfl to €8,469m, boosted by the strong momentum reported by Gucci and YSL which grew by 12.7% and 25.5% to €4,378m and €1,220m respectively. Other brands posted sales declines, led by the struggling Bottega (-9.4%). Sports activities posted a 9% increase in sales to €3,884m, underpinned by the solid growth posted by Puma which raised sales by 10.4% to €3,642m. Other brands deepened their decline to 8.4%. Strong market momentum was experienced in Western Europe and Asia Pacific which posted a double-digit growth rates, while North America and Japan reported sluggish performances. The gross margin gained 190bp to 62.9%. Recurring operating profit edged up 14.5% to €1,886m bringing the corresponding margin to 15.2% (up by 100bp). Both sports and luxury segments experienced sound margin rises. Luxury activities generated a recurring operating profit at €1,936m (+13.3%), pulled up by the booming YSL (+59.3% to €268.5m). Sports & Lifestyle profit soared by 30% to €123.2m, generated fully by Puma up to €126.6m (+37%). Net profit amounted to €813.5m (+16.9%) including an exceptional loss from discontinued operations of €11.6m. The financial position is improving with a retreating gearing to 36.5%. The proposed dividend is €4.6.
The group has sharply accelerated its pace of growth in Q3, surging 10.5% lfl to reach €3,185m (+10% reported). All regions apart from Japan experienced double-digit organic growth led by Asia Pacific which edged up 17%. In Japan, things turned around and slipped 6%. Amid such slumping demand, the luxury division has outperformed and grew by 11.3% to €2,115m, boosted by the favourable momentum enjoyed by the retail network which is being restructured. The flagship brands, Gucci and Yves Saint Laurent, have expanded their market shares and grew 17% and 34% respectively. The other luxury brands maintained a low single-digit growth (+2.5%) with a deep 10.9% slip at Bottega which was due to lower tourist inflows in France and Japan. Sport & Lifestyle grew 9.3% on a comparable basis to reach €1,064m led by Puma (+10.8% lfl) and driven by footwear products. The expanding online platform raised luxury e-commerce by 50% boosted by consistent offering and brand positioning. Up to September, sales amounted to €8,878m (+7.3% lfl). Luxury brands gathered sales of €5,993m (+6.5% lfl) and Sports revenue came to €2,861m (+9.2% lfl).
Consolidated sales were up 3.3% (5.5% on a comparable basis) to reach €5,693m in H1 16. The pace of growth has slightly accelerated in Q2, posting a 3.8% increase vs. 2.7% in Q1. Q2 luxury sales were up 3.3%, bringing the H1 performance to 3.1% with sales of €3,878m. The division was boosted by an impressive outperformance by YSL, which surged by 23.7% to reach €548m in the first six months. Gucci’s sales increased by 3.9% to €1,947m. All other luxury brands’ sales turned down, including Bottega Venetta’s which dwindled by 9.2%. Sport & Lifestyle sales grew by 5.1% in Q2 generating H1 revenue of €1,797m (+3.8%). The activity benefited from the recovery in the appeal for Puma, which was up 5.3% (€1,686m), while other sport brands were down 14.9%. Concerning margins, EBITDA was up 4% to reach €4,011m, resulting in an EBITDA margin of 17.8%. The operating margin gained 0.2% to 14.2%, drawing an operating profit of €811.1m (+4.9%). Net income surged by 9.9% to reach €464.9m. Profitability benefited from the marked performance of YSL, generating an operating profit of €109m (+80.2%). Gucci saw operating income of €536.9m, i.e. an increase of 7% and an operating margin of 27.6%. Sports’ operating profit jumped 9.7% to €48.1m, underpinned by the strong performance of Puma. The financial structure remains quite sound with decreasing net debt from €5,337m in H1 15 to €5,066m a year later. Operating FCF rocketed to €323m in the first half of 2016 compared to €58m in H1 15. Comparable revenue growth was solid in both mature and emerging markets with a marked performance in Western Europe and Japan.
Kering posted healthy growth against a tough backdrop. Q1 sales increased by 2.7% (4% on lfl basis) to €2,724m. The luxury activities grew by 2.8% (2.6% lfl) with sales worth €1,804m. Both retail and wholesale posted positive momentum (+3%) while royalties decreased by 16%. The Sport & Lifestyle division benefited from the strong growth of Puma to deliver an organic growth of 7%, although, the negative exchange rate impact pulled down the reported growth to 2.6%. The company experienced good sales momentum in Western Europe (+10%) accounting for 31% of consolidated sales, in Japan (+7%) and in the emerging countries (+7%). Asia Pacific posted poor growth of 1% while North America dropped by 3%. The luxury retail network accounted for 1,259 stores, of which 522 branded Gucci. The flagship brand contributed 50% to luxury sales amounting to €894m boosted by solid growth in Western Europe (+20%). Bottega Veneta experienced a sales drop in all regions, posting a 7.6% decline. The Slimane collections led Saint Laurent goods to outperform the market and enjoy double-digit growth in all regions with a 27.3% reported sales surge. Jewellery brands recorded good sales momentum, while watches were pulled down by the sluggish demand. The Sport division benefited from the strong growth recorded by Puma in all categories and posted 7% comparable growth. Strongly positive momentum was reported in all regions except for North America with a weak 1% increase.
Kering Group posted a solid FY2015 sales growth of 15.4% (4.6% on comparable scope), amounting to €11.58bn. The fourth quarter has impressed with 8% organic growth to €3.18bn. The luxury unit’s sales climbed by 7.2% at a constant basis, while the Sport & Lifestyle segment grew by 9.8%, sustained by the solid sales momentum of PUMA which grew by 11.7% in Q4. Year-on-year, the luxury activities reported consolidated sales of €7.86bn, i.e. an increase of 16.4% vs. 4.1% lfl growth. Brand-wise, the iconic Gucci displayed the first signs of recovery after two years in decline, growing by 0.4% on a comparable basis, driven by directly operated stores in mature and emerging markets. Furthermore, YSL did well, being the best performer with 25.8% organic growth. The Sport & Lifestyle sales were up by 13.5% (5.9% at constant currency) to €3.68bn, pulled up by the upturn of Puma growing by 6.8% at constant rates. EBITDA climbed by only 3.3% to €2.06bn, dropping the EBITDA margin to 17.8%. The operating income from recurrent operations was 1% down to €1.65bn, dropping the operating margin to 14.2% compared to 16.6% in 2014. The deterioration was due to the sport & lifestyle activity showing an operating profit declining by 31.1%. The adjusted recurring net income amounted to €1.02bn vs. €1.18bn a year earlier, i.e. down 13.6%. The proposed dividend remains unchanged at €4.
Revenues reached €5,512m, up 17% as reported and 3.5% in organic terms. Revenue generated by the Luxury division rose 18% as reported and 2.8% on a comparable basis. This overall performance was fuelled by a much stronger showing by the luxury brands in Q2 as a result of a significant increase in purchases by Chinese tourists, particularly in Western Europe but also in Japan. Revenue for the Sport & Lifestyle division was up 15.5% as reported. At comparable exchange rates, revenue growth came to 5.3%, driven by the achievement of strong sales momentum due to Puma's relaunch plan implemented from the second half of 2014. Consolidated EBITDA came to €972m, on a par with the first half 2014 figure as reported, and the EBITDA margin narrowed by 300bp on a reported basis to 17.6%. The Luxury division's recurring operating income amounted to €806m for H1. The recurring operating margin came in at 21.4%, down 380bp. More than half of this decrease was due to the combined effects of exchange rate fluctuations and currency hedges, which had a massive dilutive impact in the period. The remainder of the decline was attributable to the contraction in recurring operating income posted by Gucci and a weaker performance in Watches.
Sales at the Gucci brand have failed to match the performance of the group’s smaller labels in recent years. New CEO Marco Bizzari's action plan is to rejuvenate the brand with a more contemporary vision by investing more in Fashion. Q2 results due to be released on 27 July will not yet benefit from better momentum at Gucci.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Kering. We currently have 9 research reports from 1 professional analysts.
7digital’s recent trading update confirmed good progress. H117 revenues increased 13%, with a strong performance from high-margin licence and creative sales. Momentum in monthly recurring revenues and new contract wins, as well as the full impact of the 24-7 acquisition put the group on track for an even stronger second half and add to our confidence in the deliverability of targeted EBITDA profitability in 2018. Given the progress being made, the 3.0x FY18 EBITDA rating looks extremely attractive.
Companies: 7Digital Group
ECO Animal Health Group (EAH LN) Marketing authorisation for Aivlosin® in Egypt | Halfords Group (HFD LN) Positive view on stock re-iterated ahead of update | Rathbone Brothers (RAT LN) Potential merger with Smith and Williamson | Tribal Group (TRB LN) 2 Contracts won, total value £25.3m
Companies: HFD TRB EAH RAT
Lookers (LOOK LN) Strong results and well positioned to deliver on strategic growth
LoopUp—The provider of conference calls and online meetings is seeking to join AIM. 2015 revs of £9.2m and EBITDA of £1.02m | Bacanora Lithium— To list on AIM around 28 Sep as holding company for TSX listed Bacanora Minerals at £100m market cap | Aura Energy—ASX listed uranium developer (ASX:AEE) expected to join AIM 6 September | Autins Group plc - The acoustic and thermal insulation specialist now looks to join AIM late August
Companies: PEG COG IKA OMI EZH MMH UBI CIRC EPO
Lookers has delivered a solid set of interim results this morning, with adj. PBT from continuing operations (ex parts) up 18% to £50.2m (H1 2016: £42.6m). There was a good performance across all new, used and aftersales demonstrating a robust margin performance across all segments of the business. The trading outlook remains uncertain as we are currently seeing across the sector, and clearly September remains key for the full year performance. We are maintaining our forecast assumptions for now, and believe the valuation remains undemanding given the company’s long term track record of generating value.
Interim results reveal a strong H1 performance, with market outperformance in all areas of the business (including mid single digit LFL unit growth in New and Used, on maintained GPPUs). Whilst the outlook commentary signals a slightly more cautious view in New, the market remains close to all time high levels and the significant brand enhancement strategy completed over 18 months means we continue to anticipate market outperformance in both sales and GPPU. With the impressive CMD event still fresh in mind from May, we remain upbeat about future prospects and believe the valuation is unduly low on 7x P/E and 3.4% yield. M&A remains on the cards should vendor price demands correct and just deploying half available resource should deliver accretion of c15%. The shares should rise today.
Having outperformed materially in the period from November to April, Halfords has fallen 15% in the last 3 months. Over the next week there is a risk it could fall further if it drops out of the FTSE250. However, valuation is approaching 9x P/E (6% yield) and it has capacity in FY18 for a buyback/special dividend of up to £50m (8% return). While wider UK spending has softened, we expect Halfords’ trading update in 2 weeks to be solid (e.g. c+3% LFL) as strategic self-help combines with ‘staycation’ benefits. A good update may put its FX mitigation plan (i.e. to fully mitigate) back in the spotlight, which we think the market is overlooking. The Board has a track record of recruiting good CEO talent (…if only it could be retained!) and by 9 Nov (interims) there is hope the new CEO appointment will be finalised alongside the Autocentre review. This would remove significant uncertainty. Compared to our 400p TP, which implies a cal18 P/E of just 11x (4.8% Mar19 yield), we see value in the stock down at 310p. Buy.
Companies: Halfords Group
Gaming Realms has released a positive Q316 trading update. Real money and social/licensing revenue more than doubled and the group moved into profit, with EBITDA of almost £1m. The Slingo brand is ideal for mobile and has successfully crossed over from social to real money gaming, as well as attracting blue-chip licensing partners. We expect Gaming Realms to broadly break even at the EBITDA level for 2016 and to move into solid profitability in 2017. The group has passed a tipping point in its development, yet the 2017 EV/EBITDA is only 8.0x.
Companies: Gaming Realms
As indicated in the pre close trading statement, Marshall Motor Holdings (MMH) made good progress in H117, outperforming a weaker UK new car retail market. While uncertainty remains over the direction of end market demand, management’s growth strategy is facilitated by the strengthened balance sheet. Our forecasts are unchanged and assume ongoing market pressure in the second half of the year, with the rating discount to its peers likely to unwind further on any signs of market resilience during H2.
Companies: Marshall Motor
A strong first half performance saw Lookers deliver yet another record trading period, overcoming the dilutive effect of the sale of the Parts business in H216. The performance of the continuing activities has been enhanced by the reinvestment of the proceeds in the two new dealership groups last year. In addition the balance sheet remains strong, facilitating both organic investment and M&A, despite the uncertainty that persists in the UK car market. Lookers looks set to continue its growth strategy with a sharper brand focus. The improved prospective yield also has attractions.
The business outperformed expectations in FY16A, produced a strong start to FY17E and is outperforming expectations for FY17E as alluded to in the AGM statement. This is the catalyst for increasing our forecasts and price target, we reiterate our Buy rating on the stock.
Companies: Veltyco Group
OnTheMarket—Intention to float on AIM to raise c. £50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. Wilmcote Holdings plc—Sch1 from the Company established with the objective of creating value for its investors through the acquisition and subsequent development of target businesses in the downstream and specialty chemicals sector. Offer raising £15m at 120p with market cap of £25m. Expected 17 August 2017 Andes Energia PLC—Sch1 on admission the Company will change its name to Phoenix Global Resources plc will be an Argentinian independent oil & gas exploration and production company, offer TBC but market cap to be £844m and admission date 10 August 2017 Verditek PLC—Sch1 update from holding company in the clean technology sector with subsidiaries operating within what it considers are emergent and fast growing sectors (industrial treatment of solids, air purification, water de-odourisation, zero emission, low cost energy), offer raising £2.75m at 9p with market cap of £16.9m. Admission 10 August 2017 Xpediator Plc—Sch 1 from the holding Company for an integrated freight management business operating in the supply chain logistics and fulfilment sector across the UK and Europe with a strong presence in Central and Eastern Europe. Offer details TBC, expected Admission early August 2017. Altus Strategies—African focused natural resource Company. Offer raising £1.1m at 10p with market cap of £10.7m. Expected 10 August 2017 Hipgnosis Songs Fund investment Company offering pure-play exposure to Songs and associated musical intellectual property rights. Offer raising £200m at 100p. The Company has decided to extend the closing date for the Placing, Offer for Subscription and Intermediaries Offer to 1 August 2017. The Company may bring forward this closing date at any time. Admission 15 September 2017
Companies: HNL JLP EME AMER XLM PMG TRE TAST PHE SHRE
Etihad has terminated its financial support for the ailing airline which forced management to ask for creditor protection. The German government has granted a €150m loan guarantee that will allow Air Berlin to operate until the end of November. This bridging loan will be repaid first once the carrier has sold its assets, in particular its slots not only in Germany but also at other European airports.
Companies: Deutsche Lufthansa
William Hill reported a positive set of results, marked by the continuing recovery of the online division and a rather resilient retail market, both offset by well-flagged adverse sports results and tough comparatives. Key highlights Revenue up 3%, to £837m Adjusted operating profit* down 1%, to £129.5m Adjusted PBT* up 2%, to £111.2m Adjusted EPS* up 7%, to 11.2p Interim dividend up 4%, to 4.26p Net debt up 3% at £604.4, 1.7x EBITDA *excluding £-14.7m restructuring costs and non-cash one-offs (total: £-20.5m).
Companies: William Hill
Sales doubled in Q1, with 48% growth from Boohoo and the remainder from acquisitions (PLT/ Nasty Gal). This is an excellent performance and well ahead of expectations, albeit margins were lower. FY guidance has been raised by 10pts to 60% YoY growth but guidance has been almost universally ignored this year, and will likely be the case again. We assume 75% growth, still making prudent H2 assumptions. After factoring in the £50m new issue to fund a new mega DC, we have upgraded FY18/FY19 EPS by 9%/8%. There is currently no evidence of brand substitution, though, and on continued good execution our ongoing bull case analysis suggests FY19 EPS could yet be 20% higher. The new DC will triple capacity to £3bn sales highlighting management’s ambition for substantial long term growth. This signal, as much as the upgrades, will motivate investors, as evidenced by the new issue and £73m founder placing. Hold.