Gucci owner says it’s “impossible” to assess coronavirus impact

The French luxury group Kering announced that sales had plunged by 43.7 per cent in the second quarter due to the coronavirus pandemic
Kering said it did not have enough visibility to predict revenue or profit for the rest of the year.
// French luxury group Kering said luxury sector has been affected by the coronavirus outbreak
// The value of the FTSE 100 dropped £44bn last month and luxury retailers saw their shares drop

Gucci parent company Kering has said it remains confident in its longer-term growth expectations despite “uncertain conditions” brought on by the coronavirus outbreak in China.

The outbreak is expected to have an adverse affect on the luxury retail sector.

Last year, Chinese buyers who shopped domestically or travelled, accounted for 40 per cent of the €281 billion (£236 billion) spent on luxury goods globally, but drove 80 per cent of the growth, according to investment firm Jefferies.


“Our environment has changed significantly with the coronavirus outbreak. Due to the evolving nature of the situation, it is impossible at this time to fully evaluate the impact on business and how fast it will recover,” Kering chief executive François-Henri Pinault said.

“I do not want to engage in guesswork, but we expect things to return to normal promptly once the emergency is over.”

The value of the FTSE 100 dropped by £44 billion last month and luxury retail groups saw their shares drop as coronavirus fears continued to impact trading.

Despite this, Kering, which also owns Yves Saint Laurent, saw its fourth-quarter revenue rise 11.4 per cent to €4.4 billion (£3.7 billion), ahead of the 9.7 per cent forecast by analysts.

Its Gucci brand, which brings in around 80 per cent of annual operating profit, increased sales by 10.5 per cent, ahead of analyst expectations but slower than double-digit rates in 2018.

Meanwhile, annual operating profit rose 19.6 per cent to €4.8 billion (£4 billion), ahead of analysts’ expectations for €4.73 billion (£3.98 billion).

Kering shares rose 25 per cent in the past year, while rivals LVMH’s have risen 43 per cent and Hermes 30 per cent.

Last year, Kering expressed an interest in acquiring outdoorwear retailer Moncler. It reportedly held talks with Moncler about a possible acquisition deal.

The news, first reported in Bloomberg, prompted shares in Moncler to surge by as much as 12 per cent at the time.

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