Gucci’s Owner Kering Sees Very Significant Profit Drop on La Redoute, Puma

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; Paul Jarvis in London at

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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