Gucci Group N.V. Announces Strong Second Quarter Financial Results
Business Wire - September 24, 1998 02:15
AMSTERDAM, Holland--(BUSINESS WIRE)--Sept. 24, 1998--Gucci Group N.V. (NYSE and Amsterdam:GUC) announced today its full results for the
second quarter of fiscal 1998 ended July 31, 1998, following its preliminary release of 1998 second quarter revenues on September 9th.
Net income was US$39.0 million for the second quarter of fiscal 1998 compared to US$42.2 million a year ago. Basic net income per share for the period was
US$0.66 compared to US$0.71 last year, while diluted net income per share was US$0.65 compared to US$0.69 in the previous year. Total net revenues,
including royalties, increased 5.9% to US$236.9 million compared to US$223.7 million in the second quarter of fiscal 1997.
During the second quarter, sales through Directly Operated Stores were US$143.7 million, compared to US$147.3 million in the same quarter of last year. On a
constant currency basis, sales through Directly Operated Stores would have been US$151.6 million, an increase of 2.9% over the same period of last year.
Wholesale sales (including franchise, duty free, and department and specialty store distribution) increased 36.6% compared to the second quarter of last year. This
increase was attributable primarily to sales from the recently acquired Gucci Timepieces business, which more than compensated for the reduction in wholesale sales
on a comparative basis. Royalties declined overall due to the elimination of watch royalties from Gucci Timepieces. Royalties from other licensees increased 33.5%.
Second quarter gross profit in 1998 was US$156.7 million, or 66.1% of revenues compared to 1997 second quarter gross profit of US$141.2 million, or 63.1% of
revenues. Operating profit equaled US$50.6 million in the second quarter compared to US$55.8 million in the previous year. Operating profit as a percentage of
revenues was 21.4% compared to 25.0% a year ago. The Company's tax rate for the period was 21.4%.
"We are very pleased with our strong financial performance during the quarter, with notable strength during July," stated Domenico De Sole, President and Chief
Executive Officer. "We believe our second quarter results clearly reflect the ongoing strength of the Gucci brand, which continues to build despite the challenging
economic environment. During the quarter, we benefited from our strategy to increase local business, particularly in key European markets and Japan."
"Importantly, our fall ready-to-wear collections have met with an excellent response, with revenues increasing 38.5% over the same period of last year. Our watch
collection also performed very well during the quarter, with sales of US$49.3 million. Leather goods remain our largest single product category (44.2% of total
revenues), despite the decline in handbag sales caused by the slowdown in business from Asian tourists."
Mr. De Sole continued, "We are especially pleased with our strong gross margin. We incurred somewhat higher operating expenses as a result of our store openings
and refurbishments during the quarter. Overall, our store expansion program is on track, and our strategy to pursue real estate opportunities in key markets that have
been impacted by the economic situation in Asia --including Hong Kong, Hawaii and Japan -- should yield positive results for us going forward."
Net income for the six months ended July 31, 1998 was US$82.2 million compared to US$90.3 million a year ago. Basic net income per share for the period was
US$1.39 compared to US$1.51 last year, while diluted net income per share was US$1.37 compared to US$1.47 in the previous year. Total net revenues,
including royalties, were US$487.6 million compared to US$478.0 million in the first six months of fiscal 1997.
During the first half, sales through Directly Operated Stores were US$299.0 million, compared to US$310.7 million in the same period of last year. On a constant
currency basis, sales through Directly Operated Stores would have been US$317.5 million, an increase of 2.2% over the same period of last year. Wholesale sales
(including franchise, duty free, and department and specialty store distribution) increased 23.1% compared to the first half of last year. Royalties declined due to the
elimination of watch royalties from Gucci Timepieces. Royalties from other licensees increased 29.8%.
Regarding the Company's share repurchase program, Gucci also announced it had repurchased 643,500 shares during the second quarter and that it held
approximately 2.3 million shares in treasury on July 31, 1998. In addition, the Company stated that the Supervisory Board yesterday approved the extension of the
program, authorizing the Group to purchase an additional three million shares for a total of up to six million shares.
Mr. De Sole commented, "We believe that the repurchase of shares at current price levels represents an excellent investment."
Mr. De Sole concluded, "Our strong performance, despite difficult market conditions, is evidence of our success in managing the business in order to maintain
Gucci's industry-leading profitability."
Second Quarter Revenues:
Breakdown by Channel, Product Category and Geographic Markets
$ in Thousands Second Quarter Second Quarter % Increase
Fiscal '98 Fiscal '97 (Decrease)
----------------------------------- -------------------- ===========
Direct Stores $143,724 $147,288 (2.4)
Wholesale(a) 86,854 63,572 36.6
----------------------------------- ------------------- ===========
----------------------------------- ------------------- ===========
SUBTOTAL 230,578 210,860 9.4
Royalties 6,345 12,869 (50.7)
----------------------------------- ---------- ===========
Total $236,923 $223,729 5.9
----------------------------------- ---------- ===========
Leather Goods $104,731 $131,666 (20.5)
Shoes 35,517 38,761 (8.4)
Ready-To-Wear 26,968 19,471 38.5
Watches 49,321 6,840 621.1
Ties & Scarves 5,278 7,188 (26.6)
Other 8,763 6,934 26.4
Royalties 6,345 12,869 (50.7)
----------------------------------- ---------- ===========
Total $236,923 $223,729 5.9
----------------------------------- ---------- ===========
United States $68,250 $68,488 (0.3)
Europe 70,390 46,062 52.8
Asia 88,234 102,987 (14.3)
Rest of the World 10,049 6,192 62.3
----------------------------------- ---------- ===========
----------------------------------- ---------- ===========
Total $236,923 $223,729 5.9
----------------------------------- ---------- ===========
First Half Revenues:
Breakdown by Channel and Product Category and Geographic Markets
$ in Thousands First Half First Half % Increase
Fiscal '98 Fiscal '97 (Decrease)
Direct Stores $298,979 $310,739 (3.8)
Wholesale(a) 176,312 143,192 23.1
------------------------------------------ =========
------------------------------------------ =========
SUBTOTAL 475,291 453,931 4.7
Royalties 12,290 24,116 (49.0)
------------------------------------------ =========
Total $487,581 $478,047 2.0
------------------------------------------ =========
Leather Goods $218,560 $290,516 (24.8)
Shoes 76,148 84,501 (9.9)
Ready-To-Wear 53,533 36,509 46.6
Watches 99,346 12,362 703.6
Ties & Scarves 11,115 15,563 (28.6)
Other 16,589 14,480 14.6
Royalties 12,290 24,116 (49.0)
------------------------------------------ =========
Total $487,581 $478,047 2.0
------------------------------------------ =========
United States $142,334 $144,102 (1.2)
Europe 138,562 101,218 36.9
Asia 187,850 221,796 (15.3)
Rest of the World 18,835 10,931 72.3
------------------------------------------ =========
------------------------------------------ =========
Total $487,581 $478,047 2.0
------------------------------------------ =========
(a)Wholesale includes Franchise Stores, Duty Free Boutiques and
Department and Specialty Stores
Gucci Group N.V. is one of the world's leading designers, producers and distributors of high quality personal luxury products, including leather goods, shoes, ties
and scarves, ready-to-wear, watches, gifts, jewelry, eyewear and perfume. The Company directly operates stores in major markets throughout the world and
wholesales products through franchise stores, duty free boutiques and leading department and specialty stores. The shares of Gucci Group N.V. are listed on the
New York Stock Exchange and on the Amsterdam Stock Exchange.
This press release contains statements that are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ
materially from those anticipated.
GUCCI GROUP N.V.
SUMMARIZED FINANCIAL RESULTS
(In thousands of U.S. Dollars, except per share and share amounts)
For the Three Months For The First Half
Ended Ended
July 31, July 31, July 31, July 31,
1998 1997 1998 1997
Net revenues $ 236,923 $ 223,729 $ 487,581 $ 478,047
Gross profit 156,723 141,225 316,735 300,935
Operating expenses 106,108 85,393 209,465 180,895
Operating profit 50,615 55,832 107,270 120,040
Pre-tax income 49,892 61,124 108,889 130,494
Net income 39,001 42,210 82,150 90,254
Net income per share -
weighted average basis
(basic) $ 0.66 $ 0.71 $ 1.39 $ 1.51
======== ======== ======== ========
Net income per share -
weighted average basis
(diluted) $ 0.65 $ 0.69 $ 1 .37 $ 1.47
======== ======== ======== ========
Weighted average number of
shares outstanding (basic) -- -- 58,900,940 59,941,141
Weighted average number of
shares outstanding (diluted) -- -- 60,176,83 61,519,851
GUCCI GROUP N.V.
CONDENSED BALANCE SHEET
(In thousands of U.S. Dollars)
July 31, 1998 January 31, 1998
------------- ----------------
Assets
Cash and cash equivalents, net $ 52,521 $116,207
Trade receivables, net 82,246 74,991
Inventories, net 177,497 162,777
Other current assets 99,896 84,867
--------- ---------
Total current assets 412,160 438,842
Non-current assets
Property, plant and equipment, net 152,188 110,296
Deferred charges and
intangible assets, net 142,801 129,485
Other non-current assets 38,135 18,631
---------- ---------
Total non-current assets 333,124 258,412
Total assets $ 745,284 $ 697,254
========= =========
Liabilities and shareholders' equity
Current liabilities
Bank overdraft and short-term loans $ 51,508 $ 27,739
Trade payables and accrued expenses 135,911 115,268
Other current liabilities 74,540 87,685
---------- ------------
Total current liabilities 261,959 230,692
Non-current liabilities
Long-term financial payables 13,880 --
Other non-current liabilities 20,103 18,427
--------- ---------
Total non-current liabilities 33,983 18,427
Minority interests 2,633 1,238
Shareholders' equity 446,709 446,897
--------- -----------
Total liabilities and
shareholders' equity $ 745,284 $ 697,254
========= ==========
CONTACT: Gucci Group N.V.
Robert Singer, Chief Financial Officer
Tel: 39-55-759-2249
or
INVESTOR CONTACT:
Enza Dominijanni, Investor Relations Manager
Tel: 39-55-759-2205
or
Morgen-Walke Associates
Christine DiSanto/Caroline Babbitt/Amanda Mullin
Tel: 212/850-5600
or
Morgen-Walke Europe
Caroline Bruel
Tel: 33-1-47-03-6810
or
MEDIA CONTACT:
Morgen-Walke Associates, Inc.
Terry Rooney/Stacy Berns
Tel: 212/850-5600
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