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Gucci owner Kering see FY sales drop as Covid travel bans hit stores

Wed 17 February 2021 08:28 | A A A

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(Sharecast News) - Gucci owner Kering reported a fall in full-year sales as Covid-19 travel restrictions kept customers from its luxury stores, but signalled a recovery in the second half.

The company, which also owns the Yves Saint Laurent and Alexander McQueen brands, said 2020 consolidated revenue fell 17.5% to €13.1bn (£11.4bn).

Gucci, which makes up 60% of revenues and 80% of Kering's profits, saw sales fall 10.3% in the fourth quarter on a comparable basis, against analyst expectations of a 4% decline.

The pandemic and associated travel bans has hit famous shopping hubs like Paris, Milan and New York.

However, Kering said there was a sharp rebound in the retail network in the second half led by North America and Asia-Pacific, along with online growth of 67.5% over the year.

Total first half sales fell 30.2%, with a big improvement in the second six months when lockdowns eased in certain areas, with sales down 3.3%.

"The health and subsequent economic crises caused by the Covid-19 pandemic in 2020 have had major consequences on consumption trends, tourism flows and global economic growth," the company said.

"Along with the luxury sector, the group was deeply impacted by the effects of the pandemic on its customers and its business operations, primarily in the first six months of the year."

Chief executive François-Henri Pinault said the company saw "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".

Kering said global demand for personal luxury goods is expected to rebound in 2021, leading to growth of between 10% - 19% compared to 2020.

"None of the current scenarios for 2021 foresees the market recovering to 2019 levels. Depending on the underlying assumptions, the personal luxury goods market could contract by around 8% to 15% in 2021 compared to 2019, representing an absolute value of €240bn to €260bn. Similarly, the industry's profitability is expected to bounce back in 2021 to an average of 16% to 18%, once again remaining below 2019 levels."

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