Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on KERING. We currently have 7 research reports from 1 professional analysts.
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Brand repositioning bears fruit
10 Feb 17
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.
Sales growth accelerates in Q3
26 Oct 16
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).
YSL rockets Q2 performance
29 Jul 16
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.
Weak Q1 growth
22 Apr 16
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.
19 Feb 16
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.
Strong flows of Chinese customers into European and Japanese stores
29 Jul 15
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.
20 Feb 17
Hayward Tyler Group* (HAYT): Trading update and financial position (CORP) | Petra Diamonds (PDL): Interim results (BUY) | Gemfields* (GEM): Interim results (CORP) | Premaitha Health* (NIPT): Middle East momentum (CORP) | Sound Energy (SOU): Acquisition update and TE-8 well spud (HOLD) | Proactis* (PHD): Interim trading on track (CORP) | 7digital* (7DIG): Automotive contract win (CORP)
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
The Crown Joules
15 Feb 17
We believe that own-brand retailers that operate a balanced multi-channel proposition will be well placed to prosper in a competitive apparel market going forward. Joules is one company in particular which we believe will outperform the sector given its loyal and growing customer base, distinctive brand and strong track record of opening profitable space. We initiate coverage on the shares with a buy recommendation and price target of 249p, implying upside of 16.9% over the prevailing market price.
N+1 Singer - Carpetright - Recovery has just begun
17 Feb 17
With UK LFLs up 6.8% in Jan against tough comparatives, and Europe LFLs up 5.4% in Q3, the first clear evidence is now visible that the transformation strategy is gaining momentum. Given some uncertainties, market forecasts are yet to reflect this, but upgrades seem likely as further initiatives are rolled out. Despite a recent bounce from its all time low, the valuation is still very low on consensus assumptions, where risk now appears to be shifting to the upside. With scope for re-rating too, our 300p target price has the scope to grow to 500p over 18 months. We re-initiate with a Buy.
Panmure Morning Note 19-01-2017
19 Jan 17
Pets at Home have released a Q3 trading update this morning that will disappoint the market. Group like-for-like revenue growth was just +0.1% through 3Q16 as subdued trading across the Merchandise business weighed on continued strong growth in Veterinary Services. Profit outlook for FY17 remains in line with expectations. Suspect the shares will come under pressure.