The luxury giant Kering announced that the total revenue generated by Kering’s Houses in 2020 amounted to US$15,330.4 million, down 17.6% as reported and 16.5% on a comparable basis.
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While the health crisis and lockdown measures took a heavy toll on the Houses’ first-half sales (down 30.2%), the situation improved significantly in the second half (down 3.3%), despite new restrictions towards the end of the year in certain regions.
In the retail network, comparable sales declined 15.9% over the year and were nearly stable in the second half (down 1.5%). E-commerce sales further accelerated (up 67.5%), accounting for 13% of total sales generated by the retail network in the year.
Wholesale revenue was down 17.4% on a comparable basis, in line with the Group’s strategy to streamline and make this channel more exclusive. In the fourth quarter, total revenue generated by the Houses contracted 4.8% on a comparable basis, including a 2.9% decrease for the retail network. Recurring operating income for the Houses totaled US$4,071.3 million in 2020, resulting in a recurring operating margin of 26.6%.
Gucci reported to have solid performances and fundamentals. Gucci posted revenue of US$8,996.8 million in 2020, down 22.7% as reported and 21.5% on a comparable basis. Sales generated in directly operated stores fell 19.5% on a comparable basis, with a significant improvement in the second half (down 5.9%). Despite the store closures resulting from the pandemic, Gucci recovered a robust and encouraging sales momentum with local customers, especially in Mainland China, which benefited from repatriation of demand. Online sales continued to enjoy fast-paced growth, up nearly 70% for the year. Wholesale revenue dropped 33.4% based on a comparable basis, reflecting Gucci’s strategy of continuing to enhance its distribution network’s exclusivity.
In the fourth quarter, revenue was down 10.3% on a comparable basis, including a 7.5% decrease for the retail network. Gucci’s recurring operating income in 2020 totaled US$3,161.4 million. Recurring operating margin was extremely resilient, at 35.1% for the year, reaching 38.6% in the second half, while the House pursued its investments.
Yves Saint Laurent had resilience and return to growth in the second half. Yves Saint Laurent posted revenue of US$2,109.3 million in 2020, down 14.9% as reported and 13.8% on a comparable basis. After a sharp contraction in the first half, the House’s revenue returned to growth in the second half, growing by 2.1% on a comparable basis. In the full year, revenue from directly operated stores retreated 13.4% on a comparable basis, while online sales surged, up nearly 80%, and wholesale revenue dropped 13.7% on a comparable basis.
Yves Saint Laurent put in a solid performance in the fourth quarter (up 0.5% on a comparable basis), with favorable sales momentum in Asia-Pacific, North America and Japan. Recurring operating income totaled US$483.7 million in the year, yielding a recurring operating margin of 22.9%.
Bottega Veneta had a remarkable year fueled by an exceptional creative drive. Bottega Veneta posted revenue of US$1,463.5 million in 2020, up 3.7% as reported and 4.8% on a comparable basis. After a mixed first-half performance, sales in the second half were strong, up 18.0% on a comparable basis. Comparable revenue in directly operated stores contracted 5.3% in the full year but rose 7.2% in the second half, buoyed by robust sales momentum in the Asia-Pacific region as well as by e-commerce. Wholesale grew sharply (up 48.5%), thanks to the successful collections of the House which remains very exclusive in its selection of wholesale partners.
Trends were positive in all distribution channels in the fourth quarter, with revenue up 15.7% on high bases of comparison.
Bottega Veneta posted recurring operating income of US$207.9 million for 2020 for a recurring operating margin of 14.2%. The House delivered recurring operating income growth of 15.4% in the second half of the year.
Other Houses had excellent momentum in the Couture & Leather Goods Division. Revenue of the Other Houses totaled US$2,758.5 million in 2020, down 10.1% as reported and 9.4% on a comparable basis. Balenciaga and Alexander McQueen delivered highly satisfactory performances, posting year on-year revenue growth. The Jewelry Houses, penalized by their exposure to Western Europe, reported strong sales growth in Asia. Sales at Qeelin were up sharply over the year, buoyed by the strong recovery in Mainland China. Boucheron also delivered a solid performance in the Asia-Pacific region. In the full year, revenue for the Other Houses from the retail network was 4.9% lower, while wholesale revenue shrank 13.0%.
Sales in the fourth quarter posted solid growth (up 1.7% on a comparable basis), buoyed by double digit growth in the Couture & Leather Goods Division. Recurring operating income for the Other Houses totaled US$218.39 million in the year, yielding a recurring operating margin of 7.9%.
The Corporate and other segment delivered US$512.23 million in sales, including US$482 million for Kering Eyewear after eliminating intra-group sales and royalties paid to the Houses.
Kering Eyewear had total sales of US$589 million in 2020, down 17.6% on a comparable basis. After being hard hit by store closures in the first half, particularly in travel retail, revenue recovered in the second half, with a decline of 8.6%.
Net expenses of the Corporate and other segment totaled US$280.42 million in 2020, an improvement of US$38.45 million year on year, thanks mainly to Kering Eyewear, which delivered positive and higher recurring operating income in the year.
In 2020, other non-recurring operating income and expenses represented net income of US$197.10 million, including on the one hand the capital gain on the sale of the Group’s 5.83% stake in PUMA in October 2020, and on the other hand asset impairment charges.
Net finance costs amounted to US4413.1 million. This total includes the cost of net debt, which amounted to US$52.3 million, 17.2% lower than in the same period of 2019. Kering’s effective tax rate in 2020 was 25.7%, while its effective tax rate on recurring income remained stable year on year, at 28.1%.
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“In a year of disruption, Kering demonstrated remarkable resilience and agility. We achieved a solid top-line recovery in the second half, we protected our margins while continuing to invest in our Houses and growth platforms, our cash flow generation remained elevated, and we further strengthened the Group’s financial structure. This year, safeguarding the health and safety of our employees and customers was our first priority. I am grateful for the resourcefulness and commitment of all Kering people. I am proud of the solidarity our Group has shown in this unprecedented environment. More than ever, I am convinced that our strategy and business model are perfectly in sync with the current and future trends of the Luxury universe. We are emerging from the crisis stronger and better positioned to leverage the rebound. We invest in all our brands to maximize their potential, and to resume our profitable growth journey,” commented François-Henri Pinault, Chairman and Chief Executive Officer.