"Gucci had a tremendous fourth quarter and an excellent year in 1999 -Domenico De Sole, President & Chief Executive Officer of Gucci Group N.V. commented- Quarterly revenues for Gucci Division exceeded US$ 350 million and operating profit exceeded US$ 89 million, and we see the momentum continuing in the first quarter of 2000, with Gucci Division retail sales up 34.5% in February 2000 compared to February 1999."
"During late 1999 we began a disciplined execution of our multi-brand strategy by acquiring Yves Saint Laurent Couture, YSL Beaute and Sergio Rossi."
"We expect the Gucci and Sergio Rossi Divisions to realize excellent growth in revenues and profitability.
A significant part of our efforts will be directed to realizing the potential in the Yves Saint Laurent brand. YSL Beaute is a well established and successful manufacturer and distributor of luxury perfumes and we expect to move rapidly to improve its profitability. For Yves Saint Laurent Couture, we expect to incur operating losses in the near term as we rebuild the brand equity and transform the company from a primarily licensing operation into an integrated and directly operated one. In fact, we have already begun the process by terminating many licenses and re-acquiring the worldwide distribution rights for Yves Saint Laurent Rive Gauche"
"As part of our investment in the brands, we have strengthened the management and design teams in all of our Divisions to better pursue our strategic and operational goals.
In conclusion, management is comfortable with estimates of 2000 consolidated net income per share of approximately US$ 3.45, excluding any costs or benefits from restructuring, and assuming a forty year amortization period for the Yves Saint Laurent trademark and goodwill."
Gucci Division - Fourth Quarter Results
During the fourth quarter, Gucci Division achieved an impressive increase in revenues worldwide.
Break-down by geographic area: In the United States, revenues increased by 17.2% boosted by an increase of 27.9% in United States mainland retail sales.
Sales in Asia grew by 17.8% with notable performances in Japan, where retail sales increased 19.4% (21.9% on a constant currency basis), in Hong Kong (up 26.3%), in Korea (up 51.4%) and Guam (up 18.9%). These results reflect the improving general economic conditions as well our continued success in building local customer business.
Overall, net revenues in Europe were up 12.8%, due primarily to a 12.5% increase in retail sales (up 17.6% on a constant currency basis) on the back of strong local demand as well as of increased tourism driven by the favorable US Dollar/Euro and Yen/Euro exchange rates.
Break-down by product category: During the period, sales of leather goods and shoes increased by 11.5% and 16.5%, respectively. Sales of ready-to-wear continue to experience extraordinary growth rates (35.3% over the fourth quarter of 1998) benefiting in the quarter from the excellent sell-through of the Fall/Winter and Cruise collections.
Jewelry continues its very strong performance, growing 146.3% to sales of US$ 15.4 million principally in Directly Operated Stores. In fact, during the fourth quarter we initiated wholesale distribution of jewelry to selected fine jewelry stores.
Break-down by channel: During the fourth quarter, sales from Directly Operated Stores increased 19.4% to US$ 243.3 million. On a constant currency basis, sales through Directly Operated Stores would have increased 21.3% over the same period of last year.
Historical distribution sales (franchise, duty free, department and specialty store distribution) were up 13.0% owing to the increasing demand from Asian-based customers, as well as the strong performance of the US distribution.
Timepieces' distribution sales increased 11.1% to US$ 56.6 million, despite our closing doors to reposition the line.
Gross profit during the fourth quarter increased 15.3% over the same period of last year, while the gross margin decreased slightly (69.9% against 70.3% in the same period of last year), reflecting primarily changes in product and channel mix.
Operating margin increased to 25.6% from 25.2% achieved in the fourth quarter of 1998. Operating expenses as a percentage of net revenues were 44.3% compared to 45.2% in the fourth quarter of last year, reflecting operating leverage associated with increasing sales.
Net income increased to US$ 102.6 million, compared to US$ 66.3 million in the fourth quarter of 1998. Diluted net income per share was US$ 1.02 compared to US$ 1.12 in the fourth quarter of last year.
Gucci Group - Fourth Quarter Results
During the fourth quarter, Group revenues increased 32.3%, including the US$ 49.2 million contributed by YSL Couture, YSL Beaute (both consolidated for one month) as well as Sergio Rossi (consolidated since November 20, 1999).
Gross profit during the period was US$ 276.9 million or 69.3% of net revenues.
Operating profit reached US$ 83.5 million after amortization of goodwill and trademarks of US$ 4.4 million. This amount includes US$ 1.8 million of the amortization of the trademark and goodwill of YSL calculated on the basis of a useful life of 40 years. The Company has requested the United States Securities and Exchange Commission (SEC) to give its opinion whether this period conforms to their interpretation of the requirements of International Accounting Standards (IAS).
During the period, Gucci realized net financial income of US$ 33.8 million, having realized annualized yield of 4.84% on the investment of the Company's cash and short-term investments.
Gucci Group Full Year Results
Full year net income per share amounted to US$ 3.48 after having included a net cost of US$ 0.05 per share resulting from the consolidation of the subsidiaries acquired during the fourth quarter.
Gucci Group N.V. is one of the world's leading designers, producers and distributors of high-quality, personal luxury goods. Products include leather goods, shoes, ties and scarves, ready-to-wear, 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 speciality 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.
