Puma puts a dent in Kering’s performance

France
Published:  25 February, 2014

In the fourth quarter of 2013, consolidated revenue for Kering came in at €2.54 billion, up 4% on the same period last year on a comparable Group structure and exchange rate basis. However, restructuring of Puma and other Group companies have reduced the Group’s dividend.

For the full year, the main financial indicators reflect the Group's solid operating performance. Consolidated revenue from continuing operations amounted to €9.7 billion, up 0.1% on 2012 as reported and up 4% based on comparable Group structure and exchange rates.

The Group’s balance in terms of geographic presence and sales channels enables it to weather changes in the economic environment, notwithstanding the volatility in the global economy over the last several quarters. Comparable revenue generated outside the eurozone climbed 5.8% in 2013 and accounted for 79% of the Group total. Comparable sales growth in mature markets was sustained at 4.3%, driven by Japan and North America. Emerging markets comparable sales were up 3.4% and accounted for 38% of sales with 25.3% of this amount generated in the Asia- Pacific region (excluding Japan).

The Group's 2013 gross margin amounted to €6,091 million, up €131 million or 2.2% on the previous year as reported. Operating expenses increased by 4.1% as reported. In particular, payroll expenses rose by 2.8% on a reported basis.

Kering's recurring operating income came to €1,750 million in 2013, down 2.3% on 2012 on a reported basis, and recurring operating margin stood at 18%. At €2,046 million, EBITDA was 1% lower than in 2012.

Financial performance

In 2013, other non-recurring operating income and expenses represented a net expense of nearly €443 million and included €361 million in asset impairment losses (of which €280 million related to Puma) and €30 million in restructuring costs.

The net loss from discontinued operations came out at €822 million in 2013, mainly corresponding to the €256 million net loss recognised on the disposal of Groupe Fnac shares, after tax and distribution costs and the contribution of Groupe Fnac to first-half earnings, and a net €562 million expense recognised in relation to Redcats. This expense primarily includes gains and losses on businesses sold in the year, impairment losses taken against Redcats assets, and the commitment undertaken by Kering to recapitalise La Redoute in an amount of €315 million to cover future losses and the cost of enhancing the production base.

Adjusted for non-recurring items net of tax, net income, Group share from continuing operations in 2013 edged back 3.1% on 2012, coming in at €1.2 billion.
Net income, Group share totalled close to €50 million, reflecting the adverse impact of non- recurring expenses and the sharply negative results of discontinued operations in 2013.

Earnings per share from continuing operations came to €6.91 in 2013, compared with €10.51 for the previous year. Excluding non-recurring items, earnings per share from continuing operations amounted to €9.76, down 3.1% on the 2012 figure.
Earnings per Kering share came out at €0.39, compared with €8.32 one year earlier.

François-Henri Pinault, Chairman and Chief Executive Officer, commented: "2013 was a pivotal year for Kering during which we completed our transformation, adopted a new identity and continued on our growth path by posting solid operating and financial performances. These results were driven by good sales and profitability advances from the Luxury Division, notably in directly operated stores. As we had anticipated, results are lower in the Sport & Lifestyle Division, amid major changes at Puma aimed at rebuilding the brand’s commercial momentum. With a coherent international group of strong brands enjoying considerable organic growth potential, we are well positioned to press ahead with our strategy. As a result, we are confident in our ability in 2014 to improve on last year's revenue and recurring operating income performances." 

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