PARIS – Shares in Kering fell on Tuesday after the company’s flagship brand did not significantly top expectations for the last quarter of the year.
The French luxury-goods company said its 2018 net profit more than doubled compared with 2017. But revenue growth at Gucci, its star brand, slowed to 28 percent in the fourth quarter from 35 percent in the third quarter.
Gucci’s revenue did not miss analysts’ forecasts, but “it was only marginally above consensus and this might not be enough to please demanding market expectations,” Citi analyst Thomas Chauvet said.
At 0917 GMT, Kering shares were trading 2.0 percent lower at 442.00 euros.
Kering’s net profit rose to 3.71 billion euros ($4.19 billion) from 1.79 billion euros in 2017, beating analysts’ expectations of 2.79 billion euros net profit for the year, according to a consensus estimate provided by FactSet. Kering said it booked net capital gain of 1.18 billion euros from the disposal of a stake in Puma SE, helping its net profit for the year soar.
Kering’s fourth-quarter revenue rose 25 percent from the same period a year earlier to 3.83 billion euros, falling in line with consensus expectations of 3.81 billion euros, according to FactSet. Revenue for the year totaled 13.67 billion euros compared with 10.51 billion euros a year earlier.
Gucci’s revenue for the year grew 45 percent in Asia Pacific. Kering said in a call that business was buoyant in continental China during the fourth quarter of 2018, seeking to ease investor worries about Chinese demand drying up.
Recurring operating margin at Gucci expanded to 39.5 percent by the end of the year, Kering said.
Revenue at Yves Saint Laurent, another brand owned by Kering, rose 20 percent in the last quarter of the year, while revenue at the Bottega Veneta label, which is in the midst of a turnover, fell 2.4 percent.
The company proposed a cash dividend of 10.50 euros a share, up from 6 euros the year before.
Kering’s outlook was mixed, Citi’s Chauvet said, noting the company’s warning that its operating environment is “unsettled with regards to the macroeconomic and geopolitical uncertainties, national trade policies, and fluctuations in exchange rates, events that could impact consumer trends and tourism.”
The company reiterated its focus on its same-store growth strategy and said it will aim to further improve its operating performance, maintain a high level of cash-flow generation and keep growing its return on capital employed in 2019.