Source: Company reports/Fung Global Retail & Technology

1H16 RESULTS

French luxury group Kering reported 1H16 revenue of €5,693 million, up 3.3% and 5.5% on a constant currency.

SALES BREAKDOWN BY SEGMENT AND BRAND

• Luxury Activities: This segment’s revenue increased by 4% on a constant currency basis to €3,878 million in 1H16. Revenue growth was driven by brisk sales in Western Europe and Japan.
• Gucci: Sales increased by 5.4% year over year at constant currency, driven by the successful Gucci brand repositioning.
• Bottega Veneta: Sales of this brand decreased by 9.1% on a constant currency basis. A decline in tourism in Western Europe resulted in lower sales at the brand’s directly operated stores.
• Yves Saint Laurent: Sales jumped by 24.2% year over year at constant currency, driven by a constant-currency 31.5% revenue increase in directly operated stores. The brand posted strong growth across all regions and all product categories.
• Other Luxury Brands: The other brands posted flat overall sales growth at constant currency. The subdued performance was mainly due to a negative contribution from Brioni, which is in the process of restructuring its manufacturing base and distribution networks. Revenue from watches declined due to ongoing difficult market conditions in the product category. Furthermore, the division experienced weakness in the Eurozone, particularly in France.
• Sports and Lifestyle Activities: The Sports and Lifestyle activities segment’s revenue climbed by 9.1% on a constant currency basis to €1,797 million in 1H16. Sales of Puma increased meaningfully, by 10.6% on a constant currency basis. The brand continued its growth trend across all regions; sales of footwear increased 8.7% year over year on a constant currency basis in 1H16. This marked the eighth consecutive quarter of growth.

GUIDANCE

The company stated going forward, Luxury activities will focus on achieving same-store revenue growth and a targeted and selective expansion strategy for the store network. The changes implemented at the Gucci brand since 2015 are starting to pay off. Puma expects to achieve further revenue growth and an increase in recurring operating income for FY16.