French luxury and retail group Kering S.A. (PPRUY.PK,PPRUF.PK) warned on Wednesday that its consolidated net income for fiscal 2013 "will be down very significantly" compared with the prior year, reflecting the impact of one-time charges related to the company's sporting brand Puma AG (PMMAF.PK) as well as costs related to the planned sale of its mail-order business La Redoute.
Kering noted that the one-off charges related to Puma are primarily non-cash. Kering had recorded net income, group share, of 1.05 billion euros, or 8.31 euros per share, for fiscal 2012.
In early November, Puma said it currently expects full-year 2013 net earnings to be positive, but significantly below last year, citing impairment charges of 130 million euros in the fourth quarter. Previously, the sporting brand said it expected an increase in net earnings for fiscal 2013 compared with the prior year.
Puma added that most of the special items will be impairments charges related to non-current assets. The company further said new initiatives include closure of the product development center in Vietnam, and the planned transfer of its international product teams from London to Herzogenaurach
Kering, formerly known as PPR, also said that while it has examined the offers that it received so far for La Redoute, it will continue to evaluate the different possible options and announce its conclusions soon.
Kering, owner of the Gucci, Puma and Bottega Veneta brands, has long been exploring plans to sell both Fnac and mail-order business Redcats, which includes brands like La Redoute and Golf Warehouse.
The company is seeking to sell La Redoute as part of its efforts to increase focus on its luxury and sports brands. However, the potential sale of La Redoute and any jobs cuts at the unit by a future owner has been met with stiff resistance in France, which is grappling with high unemployment.
Further, Kering said its board of directors has acknowledged the financing needs related to the company's commitment as part of the disposal process. The company noted this will have a significant impact on its net result from discontinued operations, that is expected to be "strongly negative" in 2013.
However, Kering added that these one-off charges are non-recurring, and reiterated its confidence in the solidity of its operating performance for the year 2013 as a whole, as well as in its level of its recurring net income.
In late October, Kering reported a 3.4 percent increase in revenue for the third quarter to 2.5 billion euros. The company's Luxury Division achieved further growth across all regions, with revenue up 5.6 percent in the third quarter on a comparable basis. Fashion and Leather Goods sales advanced 6 percent during the quarter.
In Paris, Kering's shares closed Wednesday's trading at 163.25 euros, down 1.05 euros or 0.64 percent on a volume of 210,608 shares.
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