Recurring operating income fell to 1.75 billion euros ($2.4 billion) from 1.79 billion euros a year earlier, Paris-based Kering said today in a statement. Analysts predicted 1.77 billion euros, according to the median of 17 estimates compiled by Bloomberg. Revenue rose 0.1 percent to 9.75 billion euros.
Kering is raising prices and tightening distribution at Gucci in an effort to elevate its biggest brand’s appeal as luxury demand cools. While Gucci’s repositioning will probably continue to weigh on near-term growth, the strategy will pay off, Cantor Fitzgerald analyst Allegra Perry said yesterday in a note to clients. Gucci’s fourth-quarter comparable sales gained 0.2 percent, decelerating from the third quarter and trailing estimates for 0.8 percent growth.
Gucci’s fourth-quarter sales performance was the weakest since the third quarter of 2009, when sales fell 7 percent.
Net income slumped to 49.6 million euros from 1.05 billion euros. Kering said in November it expected net income to drop “very significantly” in 2013 on costs tied to the disposal of mail order unit La Redoute and one-time charges at Puma SE. Excluding one-time items, profit fell 3.1 percent to 1.23 billion euros.
Puma, Europe’s second-largest sporting-goods maker, yesterday ruled out a rapid recovery after reporting full-year profit that declined more than analysts estimated. Kering owns about 84 percent of the German company, which has been undertaking restructuring measures since 2009.
Kering shares rose 1.8 percent to 2.70 euros at the close in Paris yesterday. The stock has advanced 0.9 percent this year, valuing the owner of brands including Bottega Veneta and Balenciaga at 19.6 billion euros.
By: Andrew Roberts; Editor: Celeste Perri