Kering outperforms expectations to deliver record growth in first half of 2017
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Kering outperforms expectations to deliver record growth in first half of 2017

Luxury titan Kering has released earnings for the first half of the year, beating expectations and delivering record growth in both revenue and profits. The company said that like-for-like sales grew 26.5% year on year in the first half of 2017, as demand for its Gucci and Yves Saint Laurent brands remained high. This translated into a figure of €7.3 billion, topping analysts’ estimates of €7.22 billion. Within this figure, the luxury division was a clear winner, seeing sales growth of 28.3% from the previous year.

Kering’s share price is up 38% year to date

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SOURCE: Yahoo Finance

Sales at Gucci rose by an enviable 43.4%, and sales at Yves Saint Laurent increased by 28.5%, against the same period in the previous year.

Geographically, the company was strong everywhere. Its like-for-like sales in Western Europe rose by 33.5%, in Asia Pacific by 34.4%, and in the U.S. by 20.7%. The company’s recurring operating income also beat expectations, rising 57.1% to €1.3 billion. Analysts had been expecting a figure of €1.23 billion.

Kering’s chairman and chief executive, Francois-Henri Pinault, said in a statement: “We achieved outstanding revenue growth in the first half, clearly outperforming the sector, and delivered record profits and operating margins.”

Although far smaller than its traditional luxury businesses, Kering’s advances in its sport and lifestyle division are also notable. The segment, which is home to Puma, saw half-year revenue beat the €2 billion mark for the first time ever. Puma itself was a strong performer: the brand saw like-for-like sales rise 15.7%. Overall recurring operating income at the division came in at €110 million. That might not sound like much compared to the company’s total sales, but it translates into an incredible 128.7% growth year on year.

Disclosure

Dominion holds Kering in its Global Trends Luxury Fund.


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