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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  Kering    KER   FR0000121485

KERING

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Gucci Parent Transfers Production, Logistics in Response to Outbreak -- WSJ

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02/13/2020 | 02:48am EDT

By Matthew Dalton

PARIS -- Gucci parent Kering SA said the coronavirus outbreak has hit its business in China hard and forced it to shuffle its logistics and production, in the latest sign that the epidemic is roiling the luxury-goods industry.

The outbreak interrupted a strong run in the fourth quarter and January for Kering, which also owns Saint Laurent, Bottega Veneta, Balenciaga and other brands. Sales in the quarter rose 11% to EUR4.36 billion (about $4.75 billion).

Kering executives said its January sales were exceptionally strong, particularly to all-important Chinese clientele. But that was before the coronavirus outbreak began to take a deep toll at the end of the month.

Chinese shoppers are the luxury-goods industry's most important clientele, representing about 35% of total global sales, according to Bain & Co. At Kering, they account for slightly more than 30% of global revenue, executives say.

Kering isn't the first luxury-goods maker to feel the impact of the coronavirus.

Earlier this month, the U.K.'s Burberry Group PLC said the outbreak was hurting demand for its products in China and scrapped its full-year sales and profit guidance.

A raft of other industry players, including Prada SpA and Hugo Boss AG, have closed stores in China because of the epidemic.

François-Henri Pinault, the French billionaire who is the chief executive and the controlling shareholder of Kering, said Wednesday, "We have a strong drop in traffic and sales in the last 10 days."

Half of the conglomerate's stores in mainland China are closed, he said. The ones that are open are operating on reduced hours.

Kering is changing its production schedules and inventory distribution to reflect lower demand in China.

"We are now brand by brand reallocating that inventory to other regions in the world so that we are not too heavy in stock in China," Mr. Pinault said.

Kering said full-year sales were EUR15.88 billion, up 13% after adjusting for currency swings and other one-off impacts. Net profit for the year fell to EUR2.31 billion from EUR3.71 billion in 2018, largely due to a $1.4 billion tax settlement reached with Italian authorities.

--Cristina Roca contributed to this article.

Write to Matthew Dalton at Matthew.Dalton@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
BURBERRY GROUP PLC 6.40% 1330 Delayed Quote.-43.31%
HUGO BOSS 8.09% 23.64 Delayed Quote.-49.45%
KERING 3.47% 468.4 Real-time Quote.-22.64%
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Financials (EUR)
Sales 2020 14 376 M
EBIT 2020 4 060 M
Net income 2020 2 663 M
Debt 2020 3 084 M
Yield 2020 2,45%
P/E ratio 2020 20,9x
P/E ratio 2021 17,0x
EV / Sales2020 4,15x
EV / Sales2021 3,49x
Capitalization 56 596 M
Chart KERING
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Technical analysis trends KERING
Short TermMid-TermLong Term
TrendsNeutralNeutralBearish
Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 26
Average target price 551,59  €
Last Close Price 452,70  €
Spread / Highest target 55,7%
Spread / Average Target 21,8%
Spread / Lowest Target -12,1%
EPS Revisions
Managers
NameTitle
François Jean Henri Pinault Chairman & Chief Executive Officer
Jean-Marc Duplaix Group Chief Financial Officer
Baudouin Prot Director
Jean-François Edmond Robert Palus Director & Group Managing Director
Yseulys Costes Independent Director
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