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Research Tree provides access to ongoing research coverage, media content and regulatory news on Kering. We currently have 8 research reports from 1 professional analysts.
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 8 research reports from 1 professional analysts.
In light of the UK election, we highlight our favoured overseas earners, operators in defensive markets and those capable of taking market share, but our main topic is the structure of the UK employment market. The UK has the lowest unemployment rate since 1975 at 4.6%, and there are, consequently, fewer and fewer candidates to fill vacancies. This suggests recruitment companies may struggle to grow, but there are structural changes in the UK labour force that offer growth opportunities. Temporary labour continues to expand relative to the point in the economic cycle, its importance accelerating since 2008, and part-time labour has grown at twice the rate of full-time labour throughout both the last cycle and over the long term. There are, of course, specialist temporary recruiters, but the part-time market appears relatively untapped (at least by the quoted companies) despite being c.5x the size of the temporary segment in terms of numbers.
Companies: FOUR ACL BOOT CLL CMS CNCT FCRM LOK PPH RNWH SVCA STAF UTW WATR
Surface Transforms* (SCE): Progress headwinds (CORP) | Aukett Swanke* (AUK): Interim results (CORP) | Horizonte Minerals* (HZM): Awards further contracts for the feasibility study (CORP) | 7digital* (7DIG): Acquisition confirmed and major new contract (COR) | Accsys (AXS): A year of strong progress (BUY) | Shanta Gold (SHG): Fund raise, debt restructure and acquisition (U/R)
Companies: SCE AUK HZM 7DIG AXS SHG
N Brown Group (BWNG LN) Start to the year confirms BWNG transformation benefits emerging
Companies: N Brown Group
On June 14 to 17, Purplebricks management will attend the 51st Annual NAREE Real Estate Journalism Conference in Denver. At this conference, it will announce the commencement of its United States expansion. Today’s RNS observes: California will be Purplebricks’ first launch state; California Association of REALTORS data estimates total sales commissions exceeding US$11.5 billion; In preparation for its US launch, Purplebricks will soon begin engaging hundreds of highly experienced, full time real estate agents across California”
Companies: Purplebricks Group
Q1 trading is encouraging overall, with positive Costa LFL and robust Premier Inn RevPAR. FY18 consensus looks appropriately conservative, with no change expected at this early stage of the year. At c.10x FY18 EBITDA the valuation feels well poised, with upside from Costa initiatives likely to be capped by challenging UK consumer/high street dynamics. HOLD. Call 7:45am.
Elegant has this morning announced H1 results that should position it well to deliver our FY expectations. The YOY movements on most metrics are down as anticipated, and is due to a deterioration of trading conditions which was well flagged last year. That said, we remain comfortable with our FY expectations and are therefore leaving these unchanged. We believe the shares represent good long term value trading at a c.50% discount to NAV with a sector leading 7.9% yield (1.2x dividend cover) at the current price.
Companies: Elegant Hotels Group
Best of the Best* (BOTB): Prelims comfortably ahead, 6.5p special div (CORP) | Sopheon* (SPE): Positive AGM statement (CORP) | SCISYS* (SSY): Very positive AGM trading update (CORP)
Companies: BOTB SPE SSY
GYG—Intention to float by the superyacht painting, supply and maintenance company. Due 5 July. Raising £6.9m new plus vendor sale of £21.5m at 100p. Mkt Cap c. £47m. Revenue of €54.6m in FY16 and adjusted EBITDA of €6.7m. | Greencoat Renewables - Schedule 1. Targeting a portfolio of operating renewable electricity generation assets, initially investing in wind generation assets in Ireland. Offer TBC. Due Mid July. | FFI Holdings— Specialist in the provision of completion contracts to the entertainment industry for films, television, miniseries and streaming product. Offer TBA. Expected 30 June. | QUIZ— Omni-channel fast fashion womenswear Company intention to float. Due July 2017. Offer TBA | Ethernity Networks—Schedule 1 from Israeli based specialist in data processing technology used in high end carrier ethernet applications across the telecom, mobile, security and data centre markets. Expected late June. Offer TBA. | Jangada Mines—Sch 1 advanced stage PGM exploration project containing what the Directors understand to be the largest PGM resource, and only pre-development PGM project, in South America. Offer TBA. Expected late June. | Phoenix Global Mining— US Brown field copper play. Expected late June. Offer TBA | Touchstone Exploration— Oil E&P company active in the Republic of Trinidad and Tobago. Interests of approximately 90k gross acres. Production c. 1.3k boepd. Raising £1.5m. Expected mkt cap £7.5m - 26 June. | I3 Energy –Schedule 1. Independent oil and gas company with assets and operations in the UK. Offer TBC, 7 June admission. | Verditek— Schedule 1 update. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission late June | Tiso Blackstar Group—Schedule 1 update. Media, entertainment and marketing solutions group/ £160m mkt cap. Admission only. Expected late June. | Rockpool Acquisitions—Northern Ireland based Company seeking strong NI acquisition with an international outlook. Raising £1.5m at 10p. Due 5 July. | Residential Secure Income - social housing REIT raising up to £300m Admission due c.12 July. | ScotGems—Admission due 26 June. Seeking £50-£100m. To investing in a diversified portfolio of Small Cap Companies listed on global stock markets | DP Eurasia—Intention to float from the exclusive master franchisee of the Domino's Pizza brand in Turkey, Russia,Azerbaijan and Georgia . £20m primary raise plus a partial vendor sale. | AIB—Intention to float from AIB, Ireland's leading retail and commercial bank. The Minister for Finance intends to sell approximately 25% of the Ordinary Shares of AIB. Valuation range €10.6-€13.3bn. Admission end June. | Curzon Energy—Report on Proactive Investors of intended LSE float this year with acquisition of coal bed methane assets in Oregon. Looking to raise £3m plus. | NLB Group—financial and banking institution based in Slovenia, with a network of 356 branches. Seeking Ljubliana Stock Exchange listing with GDRs on the LSE. Expected mid June. | Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe. | Supermarket Income REIT– Up to £200m raise to acquire a diversified portfolio of supermarket real estate assets in the UK, providing long-term RPI-linked income. Due 21 July.
Companies: ECHO ORCP WYN LEK HRN HAL FCR EZH MERC WGB
boohoo continues to exceed expectations, delivering Q1 group revenue growth of some 106% to £120.1m, with standout like-for-like revenue growth of 78%. Significantly, the group has also announced plans to construct a brand new automated ‘super-site’ that will provide boohoo with an additional £2bn of net sales capacity. The c.£150m of capex required will be invested over the next three years and will be funded by a £50m equity placing alongside cash generated by the business. In our view, the £50m fund raise and continued outperformance gives boohoo enormous flexibility to grow, and when combined with the existing Burnley site, will bring group sales capacity towards £3bn, a serious statement of intent. Alongside today’s new equity placing, 3.25% of the total share capital is also being placed from existing shareholders, equating to c.£80m. We note that the sellers will be subject to a six month hard and six month soft lock up period.
This recommendation has been prompted by a positive assessment of the technical outlook for DPG’s share price. That said, there appear to be grounds for encouragement on the fundamental front too although signs of a slowdown in sales in the first few weeks of 2017, reflecting increased competition, have put pressure on the share price.
Companies: Domino'S Pizza Group
Synairgen* (SNG): FY 2016 results and better year end cash (CORP) | Patisserie Holdings (CAKE): Good H1 results (BUY) | Sound Energy (SOU): Sidi Moktar update (HOLD) | Ideagen* (IDEA): Strong trading update (CORP)
Companies: SNG CAKE SOU IDEA
Somero Enterprises* (SOM): AGM trading update, $7.5m special dividend (CORP) | Chariot Oil & Gas* (CHAR): Namibian Central Blocks CPR (CORP) | Atalaya Mining (ATYM): Proyecto Touro update (BUY) | 7digital* (7DIG): Hi-res streaming customer confirmed (CORP)
Companies: SOM CHAR ATYM 7DIG
Motif Bio (MTFB): Remain positive on REVIVE-2 readout (BUY) | LiDCO* (LID): US FDA approves latest monitor (CORP) | Zambeef* (ZAM): Still not firing on all cylinders (CORP) | Cambridge Cognition* (COG): Speech recognition clinical trial software (CORP) | Water Intelligence* (WATR): locking in growth potential (CORP) | Shoe Zone (SHOE): Disappointing H1 (HOLD) | Minds + Machines* (MMX): Valuing renewals (CORP) | Intercede* (IGP): Prelims on track (CORP)
Companies: MTFB LID ZAM COG WATR SHOE MMX IGP
Adj. PBT of £1.5m is 7% ahead of our upgraded expectation and shows 43% y-o-y growth, driven principally through a meaningful improvement in both gross and operating margins. Cash generation meanwhile continued to be very strong with FCF/adj. PAT >100% for the fourth consecutive year. This meant a year-end cash position of £2.1m, of which £0.8m will be distributed to shareholders through an ordinary and special dividend of 1.4p and 6.5p respectively. We upgrade FY18E adj. PBT by 6% (suggesting 8% y-o-y growth) – conservative assumptions we believe, considering that BOTB plans to increase its marketing spend by c.70% to £2m, which if used as effectively as previous years, provides upside risk.
Companies: Best Of The Best
Fulham Shore’s proven management team is expanding both its main brands, Franco Manca and The Real Greek, ahead of expectations. FY17 saw a 55% rise in restaurants open, to 45. We estimate 60 by end FY18, more than double the end FY16 figure. The authentic, good value, casual dining experience produces average ROCE at restaurant level of over 20%. Most openings are in Headline EBITDA profit from month one. The 3rd April trading update highlighted trading in line with (ambitious) expectations, which is in comparison to many other US and UK brands, which have found the past year difficult. Fulham Shore has clearly demonstrated robust, strong growth, expanding from London and out to provincial locations, with eventual potential for franchise, a third brand and international expansion.
Companies: Fulham Shore