Kering rides out China fears with Gucci growth
today Jul 26, 2018
Kering, owner of high-end brands including Gucci and Balenciaga, on Thursday posted higher-than-expected operating profit for the first half of the year as luxury firms weather concerns over the U.S.-China trade dispute hitting demand.
The Paris-based conglomerate said its recurring operating income rose 53 percent year-on-year to 1.77 billion euros (1.56 billion pounds), a touch above the 1.73 billion euros average forecast in an Inquiry Financial poll of analysts.
Kering's top brand Gucci, in the spotlight as it looks to build on a recent sales boom to overtake luxury rivals like LVMH's Louis Vuitton, kept up its momentum, with revenue growth slowing slightly but still well above most peers.
In the second quarter, comparable revenues at the Italian fashion label were up 40.1 percent from a year ago, following growth of nearly 49 percent in the first three months of the year.
Meanwhile, Kering does not intend to sell off any more of its smaller fashion brands beyond the ones already on their way out, the group’s managing director Jean-Francois Palus said on Thursday.
Kering said in June it was in talks with Christopher Kane to sell the eponymous label, in which it had a 51 percent stake, back to the British designer. It is also ending a joint venture with Stella McCartney.
“The common pattern of those brands is that we did not fully control them,” Palus told a conference call with analysts after publishing first half results. “We do not intend to dispose of any other brands of our current portfolio.”
Earlier this year Kering spun off the majority of its stake in German sportswear label Puma to its shareholders, and also signalled it was selling skatewear brand Volcom, as it refocuses purely on luxury.
Kering also said on Thursday it was focused on building up its business organically, rather than through acquisitions.
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