Gucci helps Kering to fashion strong sales growth

A Gucci sign is seen outside a shop in Paris. The parent company of the luxury brand posted better than expected earnings. (Reuters)
Updated 13 February 2018
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Gucci helps Kering to fashion strong sales growth

PARIS: Gucci-owner Kering posted better-than-expected sales growth in the fourth quarter and said 2018 should be another solid year as the French group refocuses its business solely on luxury.

Along with peers in the luxury goods industry including French rival LVMH, Kering benefited from a recovery in demand from Chinese consumers at home and overseas last year, while rising online sales have also propelled growth.

That trend should continue this year with strong momentum at Kering fashion labels including star performer Gucci and Balenciaga, though the group cautioned that currency swings and a strong euro could weigh on its performance.

Shares in the company -- which hit a record high of €417.40 in January and surged more than 80 percent last year -- retreated by 1.6 percent to €373.60 in early session trading.

Analysts gave generally positive reactions to Kering's results, but Exane BNP Paribas said the company might find it harder to come up with even stronger results in future.

"Kering delivered a phenomenal year in 2017," chairman and CEO Francois-Henri Pinault said in a statement, adding that the global environment remained uncertain but that Kering could do "much better than our markets" in 2018.

Kering, which also owns Yves Saint Laurent, has reaped the rewards from an overhaul at Italian fashion house Gucci over the past two years and it revamping itself to focus solely on its luxury credentials.

It plans to spin off 70 percent of its sportswear brand Puma to its own shareholders, which include the Pinault family, through its Artemis holding.

Kering will retain a stake of just under 16 percent in Puma - which posted an upbeat assessment for 2018 on Monday - and the disposal is now set for May 16.

Overall revenues rose to €4.26 billion ($5.25 billion) in the fourth quarter, up 27.4 percent year-on-year on a comparable basis, which strips out acquisitions and currency swings.

That marked a slight slowdown from the 28.4 percent growth notched up in the previous three months but beat a 24.3 percent analyst poll by Inquiry Financial.

Kering's high-end fashion labels - with the exception of leather goods specialist Bottega Veneta, which is improving slowly following a turnaround - notched up strong sales growth in 2017.

Revenues in Kering's luxury goods unit rose 30.5 percent on a comparable basis year-on-year in the fourth quarter. By contrast, sales at Louis Vuitton-owner LVMH's fashion and leather goods division were up 10 percent on a constant currency basis in the period.

Momentum at Gucci - which was reinvented with a flamboyant new look under designer Alessandro Michele and recently branched into homeware with 295 euro mugs in butterfly motifs - also eased a touch.

But it remained well above that of most major rival brands, with comparable sales growth of nearly 43 percent in the quarter.

Kering financial director Jean-Marc Duplaix told journalists that the group's Balenciaga label, for which it does not break out earnings, posted higher growth than Gucci in the second half of 2017.

Kering posted a 56.3 percent rise in adjusted operating income to €2.95 billion for 2017 as a whole, also beating forecasts, while full year revenues rose 27.2 percent on a comparable basis to €15.48 billion.


Etihad to loan pilots to competing UAE airline Emirates

Updated 24 June 2018
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Etihad to loan pilots to competing UAE airline Emirates

  • Etihad Airways has told its pilots they can join rival Emirates on a temporary basis for two years
  • The agreement is also likely to help Emirates, where a pilot shortage forced it to cancel some flights this summer

DUBAI: Etihad Airways has told its pilots they can join rival Emirates on a temporary basis for two years, according to an internal Etihad email seen by Reuters, as the downsizing of the Abu Dhabi carrier’s operations helps fill a pilot shortage for Dubai’s Emirates.
Etihad, which last week reported a $1.5 billion annual loss, has been overhauling its business since 2016, replacing its top executive, dropping unprofitable routes and shrinking its fleet.
The agreement is also likely to help Emirates, where a pilot shortage forced it to cancel some flights this summer. Management had said the shortage was a short-term issue.
In the email, Etihad said pilots who join Emirates on a two-year secondment would be placed on a leave of absence, retain seniority at Etihad, and receive their salary and full benefits from the Dubai airline.
Pilots were asked in the email to register a non-binding expression of interest and told that Emirates’ recruitment team would meet with pilots at Etihad’s offices.
Two sources separately told Reuters that Etihad had emailed staff announcing the agreement with Emirates.
An Etihad spokesman told Reuters secondment programs were common practice among airlines, enabling the effective management of pilot resources.
“This is something Etihad Airways has done for several years with partner airlines around the world,” the spokesman said.
An Emirates spokeswoman told Reuters the airline was “working with Etihad on a secondment program for some of their pilots.”
It was not immediately clear how many pilots would be offered temporary employment at Emirates and the email stated that any pilots applying for the secondment would need to complete Emirates’ training program.
Etihad employs 2,200 pilots, according to the airline spokesman. Reuters reported in January that Etihad had offered up to 18 months unpaid leave to pilots.
Emirates and Etihad have been exploring closer ties and signed a security pact in January, the first agreement between the United Arab Emirates (UAE) based airlines. Emirates has since said that a closer relationship was not about a merger.
Emirates and Etihad, backed by their state owners, have competed developing global networks from their respective hubs in Dubai and Abu Dhabi that are just 128 kilometers apart.
Emirates is owned by the government of Dubai, and Etihad is owned by the government of Abu Dhabi.