Without trying to go around the issue, the conglomerate defined the 1st semester of 2020 as the hardest it has ever had. The numbers give a clear picture: Gucci is down by 45% in the 2nd quarter. Saint Laurent hits the -48%-mark, while Bottega Veneta decreased sales by 24%, making it the most resilient brand. Kering didn’t provide specifics for Balenciaga and Alexander Mc Queen, but it says that their performances were satisfactory (the latter thanks to its footwear). The French group closed with -30.1% sales. Net profits from recurring operations for the semester were down by 63.4%. “it’s fair to say that the 1st semester of 2020 was “the toughest period we have faced”. We will come out of this crisis even stronger”, commented the president and CEO François-Henri Pinault.
“The toughest period we have faced”
Consolidated revenue for Kering’s 1st semester of only 5.3 billion euro, down 29.6% at current rates and 30.1% at constant rates, using comparable basis. The decrease in the April-June period was of 43.5%. Not as bad: UBS’ analysts cited by Reuters expected it to be -46%. The French group maintained strong growth in the online channel, up 47.2% in the first six months and up by 72.4% during the 2nd quarter. “Operating income is still in good health even with decreasing sales – says Kering’s official statement -. The data shows the group’s rapid response to the crisis and its capacity to contain costs. Forecasts say that cost-saving activities will continue to provide good results even after this 1st semester”.
The Brands’ performances
Gucci closed the quarte with revenue down by 33.8%, compared to the same period of last year. The brand was growing at double digits in January. After stores reopened, “the brand started recovering with local clients in its main markets”, reported the French group. Online sales were up by 51.8% the first semester. Saint Laurent’s revenue dropped by 30.6% in the first semester, while Bottega Veneta’s by -9.5%. the “Other Houses” category, which contains Balenciaga, Alexander Mc Queen, as well as Boucheron and Pomellato, meanwhile, lost 25.8% of revenue, compared to the previous year’s same period.
Growth remains far away
“The current context doesn’t threaten the group’s structural growth drivers, or those of the luxury industry”, states Kering in its official statement. The group expects the revenue loss registered in the 1st half of the year to not be compensated during the 2nd half. “Travel restrictions will still weigh a lot for tourism”, were the words of CFO Jean-Marc Duplaix, reported by Reuters.
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