Following Swatch Group, Richemont and recently LVMH, it is now time for Kering, a French group specialized in luxury (fashion, jewelery and watchmaking) and one of the leaders on the market, to announce its half-year results for the year 2020. As expected, the COVID-19 crisis shows its effects on sales and profitability, yet the group also demonstrates a certain resilience to the current situation, just like its main competitor, LVMH.
Kering’s results have been calculated over the first six months of 2020, thus right in the middle of what’s known as one of the worse sanitary crisis of recent history. As such, it is no surprise to the sales down by 29.6%, from 7,638 million for the first six months of 2019 to now 5,378 million. Still, not only these numbers are in line with the rest of the industry but also show that luxury, whether fashion/accessories or hard luxury, is slightly less impacted than what the market was expecting and that major groups with diversified portfolio are relatively resilient.
Due to the decrease in sales, Kering’s profitability is more impacted, with a net income down by 53%, yet still positive at 272 million – due to the group’s rapid response to the crisis and its capacity to contain costs (with more cost-saving initiatives expected for the second half of the year).
Kering’s main houses, Gucci and Yves Saint Laurent, were relatively exposed to the crisis, with sales down approximately 30%. Bottega Veneta showed strong results during the period, with sales down by only 8%. Kering doesn’t disclose financial details regarding its watchmaking division – under the name Sowind and including Girard-Perregaux and Ulysse Nardin – yet indicates in the report that “the Watch Manufactures were heavily impacted by sharp contraction in their market.”
Kering’s report indicates that “like all other luxury sector players, during the first half of the year the Group was deeply impacted by the effects of the pandemic.” Also in line with other actors of the luxury industry, Kering remains cautious regarding the months to come, since “the lack of visibility about how the worldwide personal luxury goods market will evolve in the next few months makes it impossible to forecast the Group’s second-half sales with any sufficient degree of reliability.”
The full report can be read here, at kering.com.