Gucci Group NV (NYSE and Amsterdam: GUC) today announces results for the first quarter ended April 30, 2000.

GUCCI GROUP HIGHLIGHTS

  • First quarter net revenues for Gucci Group US$ 530.7 million
  • First quarter operating profit before amortization US$ 83.3 million
  • Net result includes US$ 32.1 million after tax restructuring costs
  • First quarter diluted net income per share US$ 0.46
  • Management reiterates its comfort with full year diluted net income per share of US$ 3.10 after amortization, restructuring charges and recently announced acquisitions

GUCCI DIVISION HIGHLIGHTS

  • First quarter net revenues up 27% to US$ 342.9 million
  • First quarter Directly Operated Stores sales up 31.5% to US$ 223.7 million
  • First quarter operating profit before goodwill amortization up 26.5% to US$ 83.2 million: an operating margin of 24.2%
  • Retail sales up more than 30% in May and June month-to-date over 1999


Domenico De Sole, president and chief executive officer of Gucci Group NV commented:

``We had a tremendous start to the year with Gucci Division first quarter revenues up by 27%, showing strong growth in all major markets and across all product categories, with leather goods up 38%; ready-to-wear up 31% and jewelry up 132%. We believe that this demonstrates the global appeal of the Gucci brand and the success of our strategic initiatives. I am also delighted to report that momentum is continuing into the second quarter, with Gucci retail sales showing 30% plus growth over last year in May and June.''

``The restructuring at Yves Saint Laurent Couture is well underway, in line with our strategy to rebuild the brand equity and transform the company from a primarily licensing operation into an integrated and directly operated one. In this connection the recently announced disposal of the Tours plant and our progress in restructuring our operations in France are particularly significant. YSL Beaute has made excellent progress in restructuring its US and Italian operations, while Sergio Rossi has begun development of the first Yves Saint Laurent Rive Gauche women's shoe collection under our management. As always we continue to focus on profitable growth, both organic and by acquisition, and we are very excited by the addition of Boucheron to our portfolio of luxury brands.''

Gucci Division

Revenues

During the first quarter, Gucci Division revenues increased by more than 20% in all regions:

  • The 25% increase in United States revenue was led by 34.5% growth in mainland retail sales that were driven by outstanding local customer demand, refurbishment and expansion of many stores and the excellent performance of sales staff.
  • Total Asian turnover advanced 29.1%. Retail sales grew markedly in all regions, reflecting improving economic conditions and, again, the brand's appeal to local customers: Hong Kong retail turnover was up 42.7%; Japan 37.5%; and Korea 37.0%.
  • Revenues in Europe advanced 26.4%. Gucci recorded growth in all European countries and a strong 29.3% increase in European retail sales. The brand enjoyed particularly robust demand in its home market, Italy (up 29%), as well as in France (up 45%).

Gucci posted outstanding growth in its core leather goods categories, as handbags, small leather goods and luggage all advanced by more than 30% in the first quarter, reflecting the success of the Spring/Summer collection.

Continued growth in ready-to-wear turnover reflects the increased selling space dedicated to the product, better customer service and, management believes, Gucci's growing reputation as a ready-to-wear house.

Sales from Directly Operated Stores increased 31.5% to US$ 223.7 million, while wholesale distribution turnover increased 37.0% over the same period of last year. Sales to franchise, duty-free and department and specialty store customers all increased in excess of 20%, demonstrating the continuing strong performance of the US distribution as well as renewed demand from Asian-based customers.

Timepiece distribution sales decreased 0.5% to US$ 47.3 million as a result of Swiss Franc depreciation against the US Dollar. On a constant currency basis, Timepiece distribution revenues would have increased 6.8% in the first quarter of 2000.

Margins

Gucci Division gross profit during the first quarter increased 28.6% to US$ 230.5 million representing 67.2% of sales against 66.4% in the first quarter of 1999. Gross margin strength derived principally from strong retail turnover, increased leather goods sales and a favorable US Dollar/Euro exchange rate.

Gucci Division operating profit before goodwill amortization increased 26.5% to US$ 83.2 million from US$ 65.8 million in the first quarter of 1999, corresponding to an operating margin of 24.2% (1Q 1999: 24.3%).

YSL Beaute

Revenues

First quarter revenue at YSL Beaute was US$ 138.4 million compared to US$ 129.6 million in first quarter 1999, despite the depreciation of the Euro against the US Dollar (which negatively impacted Yves Saint Laurent brand turnover by approximately 7%).

Core YSL brand women's fragrance sales were US$ 38.6 million compared to US$ 45.9 million in first quarter 1999, a decline attributable to foreign exchange and the end of Limited Edition sales. Men's fragrance turnover grew 44.8% to US$ 22.3 million in first quarter 2000 from US$ 15.4 million in the same period of last year, led by Kouros Body, which was launched during the quarter. YSL Beaute posted revenue growth in both make-up and skin care in first quarter 2000.

Margins

YSL Beaute's gross margin, approximately 73% in the first quarter, was in line with expectations, while operating margin before goodwill and trademark amortization was approximately 2% owing to the seasonality in the fragrance business.

This performance places the division on target to realize its objective of an 8% operating margin for the full year.

Other Divisions

Yves Saint Laurent Couture

Yves Saint Laurent Couture turnover, US$ 30.4 million in the first quarter, included approximately US$ 8 million in royalties. Yves Saint Laurent Couture operating losses before goodwill and trademark amortization in the first quarter were approximately 5% of net revenues and in line with management expectations.

Restructuring at Yves Saint Laurent Couture is proceeding according to plan. Management believes that the termination of licensing contracts as well as the Christian Lacroix distribution agreement will lower revenue and lead to further losses over the course of 2000.

Sergio Rossi

Sergio Rossi turnover, US$ 19.0 million, which included approximately US$ 13.9 million in wholesale revenue, was in line with expectations. The division posted a 14.2% operating margin before goodwill and trademark amortization in the first quarter.

The first quarter is normally the strongest quarter for Sergio Rossi owing to the seasonality of its footwear business. Consequently, management believes that, notwithstanding the excellent orders received for the Fall/Winter Collection, turnover and margins in subsequent quarters may be modestly less than first quarter.

Gucci Group

In the first quarter, Gucci Group revenues were US$ 530.7 million, including the US$ 187.8 million contributed by Yves Saint Laurent Couture, YSL Beaute and Sergio Rossi.

Group gross profit in the first quarter was US$ 360.0 million or 67.8% of net revenues, compared to the Gucci Division margin of 67.2% in quarter one. The comparatively higher gross margin of the recently acquired companies owes primarily to YSL Beaute's gross margin.

Group operating profit before goodwill and trademark amortization was US$ 83.3 million, including the US$ 83.2 million contributed by Gucci Division.

During the period, Gucci Group generated net financial income of US$ 31.7 million, having realized annualized yield of 5.54% on the investment of the Company's cash and short-term investments.

In the first quarter the Group's effective tax rate was nil due to the expected tax benefit associated with the restructuring expenses and the deferred tax credit associated with trademark amortization.

The Group's net income for the first quarter was US$ 46.6 million and included US$ 32.1 million of restructuring costs, net of tax, related to acquisitions made in 1999 and amortization of goodwill and trademarks of US$ 12.7 million, net of tax. First quarter diluted net income per share amounted to US$ 0.46.

Gucci Group N.V. is one of the world's leading multi-brand luxury goods companies. Through the Gucci, Yves Saint Laurent, Sergio Rossi and Boucheron brands it designs, produces and distributes high-quality personal luxury goods, including ready to wear, handbags, luggage, small leather goods, shoes, timepieces, jewelry, ties and scarves, eyewear, perfume, cosmetics and skincare products. The Group 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.

Under the safe harbor provisions to the U.S. Private Securities Litigation Reform Act of 1995, the Company cautions investors that any forward-looking statements of projections made by the Company, including those made in this document, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Factors that may affect the Company's operations are discussed in the Company's Annual Report on Form 20-F for 1998, as amended, filed with the U.S. Securities and Exchange Commission.

CONTACT:

  • Tomaso Galli -Director of Corporate Communications, media, +31-20-4621-700, or mobile, +39-335-737-8435;
  • Cedric Magnelia, Director of Investor Relations and Corporate Development, investors, +31-20-4621-707; or
  • Enza Dominijanni, Director of Investor Relations, investors, +39-055-7592-205, all of Gucci Group N.V.

First Quarter Revenues:
(Breakdown by Channel, Product Category and Geographic Area for Gucci Division)

First Quarter
First Quarter
% Increase
$ in Thousands
2000
1999
(Decrease)
GUCCI DIVISION
Directly Operated Stores
223,740
170,115
31.5
Wholesale Distribution*
61,860
45,157
37.0
Timepieces Distribution
47,293
47,527
(0.5)
Royalties
9,989
7,218
38.4
Total Gucci Division
342,882
270,017
27.0
Leather goods
157,190
113,946
38.0
Shoes
44,379
39,903
11.2
Ready-To-Wear
47,552
36,380
30.7
Watches
55,944
55,197
1.4
Jewelry
12,350
5,324
132.0
Ties & Scarves
5,845
5,614
4.1
Other
9,633
6,435
49.7
Royalties
9,989
7,218
38.4
Total Gucci Division
342,882
270,017
27.0
United States
96,806
77,469
25.0
Europe
100,787
79,758
26.4
Japan
72,460
53,763
34.8
Rest of Asia
62,832
51,011
23.2
Rest of World
9,997
8,016
24.7
Total Gucci Division
342,882
270,017
27.0
Sergio Rossi
18,986
------
N/A
Yves Saint Laurent Couture
30,400
-------
N/A
YSL Beaute
138,415
-------
N/A
TOTAL GUCCI GROUP
530,683
270,017
96.5
(*) Wholesale Distribution includes Franchise Stores, Duty Free Boutiques and Department and Specialty Stores
YSL Beaute's First Quarter Revenues:
First Quarter
First Quarter
% Increase
$ in Millions
2000
1999
(Decrease)
YSL Fragrances
60.9
61.3
(0.7)
YSL Cosmetics
40.0
34.5
15.9
Total Yves Saint Laurent
100.9
95.8
5.3
Other Brands
37.5
33.9
10.6
Total YSL Beaute
138.4
129.7
6.7

 

GUCCI GROUP N.V.
SUMMARIZED CONSOLIDATED FINANCIAL RESULTS
(In thousands of U.S. Dollars, except per share and share amounts)
For The Three Months Ended
April 30, 2000
April 30, 1999
Net revenues
530,683
270,017
Gross profit
359,979
179,259
Operating expenses
276,703
118,234
Operating profit before goodwill and trademark amortization
83,276
61,025
Goodwill and trademark amortization
17,752
1,615
Operating profit after goodwill and trademark amortization
65,524
59,410
Financial income, net
31,727
17,013
Pre-tax income
45,448
73,210
Taxation
(2,032)
12,547
Minority interests
847
435
Net income
46,633
60,228
Net income per share (basic)
0.47
0.79
Net income per share (diluted)
0.46
0.77
Weighted average number of shares outstanding (basic)
99,773,229
76,689,375
Weighted average number of shares outstanding (diluted)
101,181,110
78,524,256
GUCCI GROUP N.V.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands of U.S. Dollars)
April 30, 2000
January 31, 2000
ASSETS
Current assets
Cash and cash equivalents
2,971,690
2,948,340
Trade receivables, net
260,450
255,929
Inventories, net
227,587
250,716
Other current assets
263,379
214,007
Total current assets
3,723,106
3,668,992
Non-current assets Property, plant and equipment, net
317,092
314,905
Goodwill, trademarks, other intangible assets and deferred charges, net
1,362,758
1,497,241
Other non-current assets
69,884
70,559
Total non-current assets
1,749,734
1,882,705
TOTAL ASSETS
5,472,840
5,551,697
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank overdrafts and short-term loans
488,552
543,500
Trade payables and accrued expenses
330,988
369,503
Other current liabilities
218,912
126,569
Total current liabilities
1,038,452
1,039,572
Non-current liabilities
Long-term financial payables
138,653
143,196
Long-term tax payable and deferred tax liabilities
344,733
398,059
Other non-current liabilities
103,474
103,993
Total non-current liabilities
586,860
645,248
TOTAL LIABILITIES
1,625,312
1,684,820
Minority interests
5,897
5,476
Shareholders' equity
3,841,631
3,861,401
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
5,472,840

5,551,697