INTERNATIONAL. Luxury group Kering has reported consolidated revenue of €5,693 million for the first half of 2016, up +3.3% compared to H1 2015. Recurring operating income rose +4.9% year-on-year to €811 million.
The group performance, driven by resurgent performances from Gucci and Yves Saint Laurent, beat analysts’ estimates.
Comparable (like-for-like) revenue growth (+5.5%) was strong in mature markets, led by Western Europe and Japan, and in emerging markets. Revenue generated outside the Eurozone accounted for 78% of the consolidated total in the first six months of 2016. Exchange rate fluctuations had a negative impact on revenue during the period, Kering said. Travel retail is becoming an increasingly key channel for Kering, which is putting increased resources and focus on the sector.
Gross margin for the first half of 2016 was €3.602 million, up +6% over H1 2015.
Recurring operating margin amounted to +14.2% for the group as a whole, with activity in the Luxury segment posting an increase of +21.7%. Recurring operating margin for the Sport & Lifestyle activity was +2.7%.
EBITDA was €1.011 million, a +4% rise compared to the first half of 2015. Net income attributable to the owners amounted to €465 million versus €423 million for the first half of 2015.
Growth for Kering’s Luxury activities in the second quarter outpaced that in the first three months of the year by +5.2%. Key growth contributors were luxury brands Gucci and Yves Saint Laurent.
In the first six months of 2016, Gucci’s revenue rose +3.9% on a reported basis and +5.4% on a comparable basis. The brand’s recurring operating income totalled €537 million for the first half of 2016 and recurring operating margin widened by 80 basis points to 27.6%.
At constant exchange rates, sales in directly operated stores increased by +4.9% over the first half, driven by revenue growth for all of the brand’s main product categories. The year-on-year increase in revenue generated by this distribution channel was most pronounced in Western Europe, where comparable growth came to +19.8%.
Yves Saint Laurent reported €548 million in revenue for the first six months of 2016, up +23.7% on a reported basis and +24.2% at comparable exchange rates. Revenue from retail sales in directly operated stores (which accounted for 68% of the brand’s total sales in the first half of 2016) jumped +31.5% on a comparable basis, led by a strong increase in same-store sales, said Kering.
Bottega Veneta posted revenue of €571 million in H1 2016, down -9.2% as reported and -9.1% based on comparable data. Revenue generated in directly operated stores was negatively affected by lower tourism in Western Europe.
In emerging markets (which accounted for 45.3% of the brand’s total revenue for the period), Bottega Veneta’s direct sales rose +3.2% on a comparable basis, with a significantly faster pace of growth in the second quarter. According to Kering, the upswing in business was mainly attributable to Chinese customers repatriating their purchasing to their domestic market and certain regional Asia Pacific markets.
Total revenues generated by Other Luxury brands amounted to €811 million in the first half of 2016, down by -0.5% from the first half of 2015. At comparable exchange rates, revenue was stable year-on-year and picked up in the second quarter.
Kering’s wholesale network was the main distribution channel for Other Luxury brands, with sales up +1.7%, accounting for 55.9% of the total.
In Kering’s Sport & Lifestyle activities, Puma posted a +5.3% revenue increase in the first six months of 2016. Based on a comparable Group structure and exchange rates, the year-on-year increase was +10.6% for the full six months, with the pace of growth accelerating to +13.2% in the second quarter.
