Kering Group 2015 Annual Report Omnidirectional Interpretation

The second largest of France

Group PPR officially changed its name to Kering (Kai Yun group) in June 8, 2013.

In recent years, the group has carried out a series of divestiture, merger and acquisition, and internal organizational structure adjustment so as to get rid of the comprehensive retail group image of the historical evolution, and focus on luxury goods.

Two major businesses.

In the 2015 fiscal year, Kering group sold Tretorn group's industrial property and Italy luxury.

Brand Sergio Rossi (Sergio Rossi) has gradually retracted control of its luxury brand glasses product line since September 2014.

At present, Kering's two major business lines include:

* sports + lifestyle:

Germany PUMA (Puma) (83% shares)

US sports lifestyle Volcom (with 100% shares)

Among them, Volcom also owns Electric 100% shares.

* luxury: (divided into two major categories: clothing, leather goods, watches and jewelry).

100% holding clothing brands: Italy Gucci (Gucci), Italy Bottega Veneta (Bao Tijia), France Yves Saint Laurent Laurent (Saint Laurent), British Alexander McQueen (Alexander McCune), French Balenciaga (Paris family) and Italy Menswear Brioni (Bly Noni).

British designer brand Stella McCartney with 50% stake (Stella Macartney)

British designer brand Christopher Kane (Christopher Kaine) with a 51% stake

100% French jewelry brand Boucheron (Boucheron)

Swiss Sowind watch group with 50% stake (its brand Girard-Perregaux (PERREGAUX) and Jean Richard (Shang Weisha))

Hongkong jewelry brand Qeelin (Unicorn jewelry) with a 78% stake

Italy Jewelry Group Pomellato (Bowman Lando), whose brand includes Pomellato and Dodo, has a 75% stake.

100% holding Swiss watch Ulysse Nardin (Athens watch)

Overview of the performance of the two major business sectors

In 2015, Kering group:

Total sales revenue of 11 billion 584 million euros, an increase of 15.4% over the same period, excluding the exchange rate effect, an increase of 4.6%- over the same period, of which luxury goods accounted for 68%, and sportswear accounted for 32%.

Operating profit of 1 billion 647 million euros, down 1.02% compared to the same period, operating interest rate 14.2%-, which accounted for about 95% of luxury goods, sportswear accounted for about 5%

The net profit of luxury goods and sportswear business totals 1 billion 17 million euros, down 13.6% from the same period last year.

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Luxury plate:

The luxury sector is the top priority of the Kering group. The overall performance is as follows:

Total sales of $7 billion 865 million, an increase of 16.4% over the same period, increased by 4.1% at constant exchange rates.

Operating profit of 1 billion 708 million euros, an increase of 2.5% over the same period last year

Among all kinds of products, leather products accounted for the highest proportion, reaching 53%, and garments and footwear products were second third, accounting for 16% and 12% respectively.

Kering group's three largest luxury brands Gucci, Bottega Veneta and Saint Laurent contribute 78.3% of sales to the luxury goods sector and 92.2%'s operating profit. The specific data are as follows:

In the luxury sector:

Gucci sales accounted for 50%, operating profit margin 26%, contributed 60% of operating profit.

Botegga Veneta sales accounted for 16%, operating profit margin 29%, contributed 22% of operating profit.

Saint Laurent sales accounted for 12%, operating profit margin of 17%, contributed 10% of operating profit.

Sales of these three luxury brands increased compared to the same period last year, with sales growth of Saint Laurent, the highest, reaching 37.7% year-on-year.

Although the growth rate is lagging behind other main brands, Gucci is still the flagship brand of Kering. Its sales and profits are far ahead of others.

According to the average number of employees in each brand, the per capita sales of Gucci and Bottega Veneta are around 370 thousand euros, and after a year of rapid growth, the per capita sales of Saint Laurent have reached 500 thousand euros, but per capita profits are still not as good as those of the other two brands.

The main reason lies in:

Saint Laurent has a low proportion of leather goods, only 49%, while Bottega Veneta is as high as 87%, and Gucci has 57% -

The penetration rate of Saint Laurent in the Asia Pacific region outside Japan is only 22%, which is much lower than that of Bottega Veneta and Gucci's 38% and 35%. The profit margins of Japan's Asia Pacific region, led by China, are generally higher than those of Europe and the United States.

However, there has been a change in the proportion of Saint Laurent's wholesale channels.

By the end of December 31, 2015, there were 142 direct outlets in the retail network of Saint Laurent, which accounted for 64% of the total sales, a significant increase compared to 40% in the same period last year.

(above: Gucci's commodity classification ratio and market share)

(figure above: Bottega Veneta's commodity classification ratio and market share)

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(figure above: Saint Laurent's commodity classification ratio and market share)

Sports + lifestyle plate:

The German sports brand Puma is the flagship brand of Kering in the sector.

In sports and lifestyle, sales of sports and lifestyle businesses in Kering 2015 fiscal year were 3 billion 680 million euros, an increase of 13.5% over the same period, an increase of 5.9% over the fixed exchange rate and a profit of 94 million 800 thousand euros, down 31.1% from the same period last year.

Among them, Puma sales amounted to 3 billion 403 million euros, accounting for 92.5%, operating profit of 92 million 400 thousand euros, accounting for 97.5%.

In the 2015 fiscal year, due to the impact of the US dollar exchange rate fluctuations and the geopolitical instability in Eastern Europe, Puma's performance was poor and its operating profit dropped by 27.8%. There were also many rumors that Kering might sell Puma.

Ownership structure and stock price trend:

The structure of shareholders of Kering group is as follows:

The largest shareholder is Pinault family controlled Artemis group, holding Kering 40.9% shares.

The rest of the open shares are mainly in the hands of institutional investors, accounting for 53.8% (of which 8.5% are French investment institutions and 45.3% overseas).

23% of the equity held by overseas investment institutions are held by North American investment institutions, and 10.6% are held by UK investment institutions.

Personal investor shareholding ratio 4.9%

Due to the instability of the world economic environment, Kering's stock price fluctuated sharply in 2015.

The share price went up all the way in the beginning, but it began to decline as a whole since April.

By the year December 31st, the stock price of the whole year had fallen by 1%, while the French CAC 40 index had increased by 9% during the same period.

The profitability of Kering Group continued to decline in 2014.

Net financing liabilities rose from 4 billion 400 million euros to 4 billion 680 million euros;

Debt paying ability further declined, and net profit before net interest / interest tax depreciation increased from 2.21 to 2.28 times.

Overview of group assets

From Kering group's operating assets structure chart, we can see that in the commercial real estate of 1264 retail outlets in the luxury sector, 1250 is operated by means of operating lease, and the 4 is obtained through financial leasing.

Directly owned property rights are only 10, compared with last year by more than half.

There are 26 properties in the 71 manufacturing plant.

Appendix:

Group sales and profit detailed data:

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The income and operating profit statement of the luxury sector:

Income and operating profit tables of major luxury brands:

Table of income and operating income of sports and lifestyle sectors:

Sports and lifestyle brand income and operating profit statement: