Gucci’s Owner Kering Sees Very Significant Profit Drop on La Redoute, Puma
November 14, 2013 Leave a comment
Kering Sees Very Significant Profit Drop on La Redoute, Puma
Kering SA (KER), the owner of Gucci, said it expects net income this year to drop “very significantly” because of costs related to its planned sale of mail-order unit La Redoute and one-time charges related to its Puma brand. Any “solution” for La Redoute “will have a significant impact on the net result from discontinued operations,” the Paris-based company also said in a statement today after the close of trading. Puma, the sporting-goods brand in which Kering is controlling shareholder, last week said it would book one-time charges of about 130 million euros ($175 million) this quarter.Kering, formerly known as PPR, said its board met today to discuss offers for La Redoute, which it has been seeking to sell since 2010 as it focuses on luxury and sports brands. The conclusion will be announced “soon,” it said. The sale and any possible job cuts from the disposal have raised the ire of the French government, which is trying to reduce unemployment that has touched a 14-year high of 10.9 percent.
La Redoute is the largest business of Redcats, the home-shopping unit that Kering is breaking up and selling. A fund owned by Swedish buyout firm Nordic Capital agreed in February to buy two Redcats brands, bringing proceeds from selling the division’s parts to more than $1 billion.
Puma SE Chief Executive Officer Bjoern Gulden last week pledged to make the company, Europe’s second-largest sporting-goods maker, more agile as it seeks to reconnect with consumers. The Puma charges related to the closing of a product development center in Vietnam and the transfer of personnel to Germany from the U.K.
Kering said all the charges and costs referred to are non-recurring and reiterated “its confidence in the solidity of its operating performance for the year 2013 as a whole, as well as its level of recurring net income.” The company reported net income of 1.05 billion euros in 2012.
Kering shares slid 0.6 percent to 163.25 euros. They have advanced 18 percent this year.
To contact the reporters on this story: Vidya Root in Paris at vroot@bloomberg.net; Paul Jarvis in London at pjarvis@bloomberg.net
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