Commenting on third quarter results, Domenico De Sole, President and Chief Executive Officer of the Gucci Group, said:
I am delighted with Gucci Group’s third quarter performance, which showed an operating profit, before goodwill and trademark amortization of US$ 133.0 million compared to US$ 69.2 million in the same quarter last year. These results were led by the spectacular performance of the Gucci Division, including a 22.6% increase in sales to US$ 375.1 million and an operating margin before goodwill and trademark amortization of 25.8%.
Among the recent highlights, which will provide future growth in revenues and profits, were the reopening of expanded flagship stores in New York, Rome and Paris and the acquisition of the businesses of our licensee for Women’s Ready-to-Wear and our Japanese watch distributor. In addition, excellent progress has been made in integrating our new brands. Yves Saint Laurent has moved much faster than could have been expected in building a strong management team, restructuring its operations, eliminating licenses and laying the groundwork for its new store network.
Tom Ford’s first Yves Saint Laurent collection, shown in October, was well received by buyers. The collection will be in the stores in February 2001, supported by a strong advertising campaign.
Our future looks equally bright. In 2001 we expect double digit revenue growth at the Gucci Division and high single digit revenue growth at YSL Beauté, led by the new YSL fragrance to be introduced in Autumn 2001. We will continue to reorganize Yves Saint Laurent on the proven Gucci model of control of design, production, promotion and distribution.
Thus the company will continue to have losses due to diminished royalties resulting from license terminations, the costs of developing and promoting completely new product collections and the costs of refurbishing, expanding and opening stores. We expect a significant improvement in Yves Saint Laurent operating margin in 2002 as our Directly Operated Store roll-out plans are implemented.
We have just added two exciting new brands to our Group. Alexander McQueen is a great design talent. We are confident that with our resources we will be able to work together to support and develop the brand in the coming years.
Bedat & Co., whose founders Simone and Christian Bedat have had extraordinary success in the watch industry, offers excellent potential in the prestige timepiece segment.
FULL YEAR 2000 OUTLOOK
Management reiterates its previously stated belief that the Group will achieve full year diluted net income per share of at least US$ 3.10. Management further estimates the full year, net of tax, per share impact of goodwill and trademark amortization and restructuring charges to be approximately US$ 0.65 and US$ 0.40, respectively, and consequently, estimates the Group's fully diluted net income per share before these items to be at least US$ 4.15 for 2000.
Management expects these results to be achieved based on estimated revenues of approximately US$ 2.2 billion for the Group and US$1.45 billion for the Gucci Division.
2001 OUTLOOK
Based on the Group’s recently completed budget and the Company’s current structure, management expects Gucci Group in 2001 to generate revenues of approximately US$ 2.5 billion and an operating profit before goodwill and trademark amortization of approximately US$ 440 million, or approximately 17.5% of revenues.
Management considers this to be an extraordinary result in light of the fact that it includes a budgeted operating loss of approximately US$ 50 million for Yves Saint Laurent.
Based on the Group’s current structure, management expects Group net interest income to be approximately US$ 110 million and goodwill and trademark amortization, net of deferred tax, to be approximately US$ 87 million in 2001.
Based on the aforementioned assumptions, management believes the Gucci Group can achieve fully diluted net income per share of approximately US$ 3.40 in 2001.
Excluding goodwill and trademark amortization, management estimates that fully diluted net income per share will be approximately US$ 4.25 in 2001.
Gucci Group today announces the appointment of Giacomo Santucci as Managing Director of the Gucci Division and Vice President of Gucci Group, reporting to Brian Blake, President and Chief Executive Officer of the Gucci Division, and to Domenico De Sole, President and Chief Executive Officer of Gucci Group. Giacomo Santucci will join Gucci in January 2001 from Prada Group.
Commenting on the appointment, Domenico De Sole said, “I am pleased that Giacomo is joining Gucci. Giacomo’s experience and extensive knowledge of the luxury goods industry will be a great asset to the Group, complementing the already strong skill base of our management team. Appointments of such high calibre demonstrate the excellent work environment of our company, as well as the allure and strength of the Gucci brand and strategy. They also help reinforce our position among the world’s leading multi-brand luxury goods companies.”
