French luxury group Kering had a like-for-like turnover increase of 4 % in its 2013 fiscal year, with luxury products performing exceptionally well, but its profit took a huge 95 % blow to 50 million euro.
One billion euro profit becomes 50 million euro profit
Kering’s 2013 turnover was 9.75 billion euro, a 0.1 % increase compared to 2012, but a 4 % increase on a like-for-like basis, which even reached 5.8 % outside the euro zone. That same segment of the market represented 79 % of the group’s total turnover.
Net profit barely reached 50 million euro, an astonishing drop compared to 2012 when it managed a 1 billion euro profit, which CEO François-Henri Pinault explained by pointing towards the transformation from PPR to Kering - shifting the attention mostly towards two core brands, Gucci and Puma.
Core brands perform badly
A few brands, like Yves Saint Laurent, did quite well last year, but Puma’s and Gucci’s bad results melted away profit. Gucci, the group’s most important luxury brand, dropped its turnover 2.1 % to 3.56 billion euro, the worst result in years. Nevertheless, Kering’s luxury brands lifted their operational profit 4.4 % to 1.7 billion euro.
Sporting brand Puma’s bad performance largely nullified the positive numbers, crashing the sport & lifestyle branch’s operational profit 35 % to 200 million euro. Puma’s relaunch in 2014, under the tutelage of new CEO Bjorn Gulden, should mean the brand can grow again, but managing director Jean-François Palus has warned that the effects of the relaunch may not become visible for another year.