Gucci Spends 1 Billion 250 Million Euros On Huge Sums Of Money To Reconcile Tax Evasion Investigations

Kering SA (KER.PA) Kai Yun group finally spent a huge amount of 1 billion 250 million euros to settle with the Italy tax authorities in order to end the investigation of the company and its Gucci Gucci brand. However, the investigation by the former and current management of the brand is continuing.

According to a statement released on Thursday, 1 billion 250 million euros includes 897 million euros of late tax and additional fine and interest.

The paction will have a negative impact on the French group's profit of 600 million euros in 2019 due to additional taxes, and 1 billion 250 million euros will be reflected in the cash flow statement in the current fiscal year.

As early as this year, the French group warned of possible tax problems.

In January 25th, Kai Yun group announced that the Italy tax group had launched an investigation into the group's Luxury Goods International (LGI) in Switzerland, which allegedly pferred the actual business in Italian company to the shell company of LGI. The survey focused on 2011-2017 years of operation, because the French group Italy headquarters had already been formally investigated in 2017.

Although Kai Yun group said in its January statement that LGI is a real entity with 600 employees and has confidence in litigation, the market generally believes that this is just an official statement. Finally, the French group must conclude the investigation with a huge settlement.

The paction between Kai Yun group and Italy tax bureau has a lot of warning.

Earlier, including Prada SpA (1913.HK) Prada group, almost all the Italy luxury goods group had a similar situation, no company can end up alone, with a huge settlement money to end the proceedings, including the pfer of a large number of Off Shore Company to Italy native soil to compromise.

After the financial crisis, Italy's tax authorities began to operate on the best performing industries in the country. The luxury industry took the lead. It is hard to say that the overall downturn in Italy's luxury industry has nothing to do with the action.

After the group spent money, Gucci's current and former CEO Marco Bizzarri and Patrizio Di Marco are still being investigated by the authorities in Italy, because of the above cases, two represent Italian company.

It was reported that rumors that they might face criminal charges for tax evasion were relieved on Thursday. Sources believe that the reconciliation between Kai Yun group and Italy authorities will bring a similar deal between Marco Bizzarri and Patrizio Di Marco to Italy authorities.

Affected by the impact of Sino US sweater, Kering SA (KER.PA) Kai Yun group fell 2.73% on Thursday to 501.60 euros. This week, it fell more than half of the total, but it is still operating at a high level.

In the first quarter of this year, despite the sharp decline in the growth rate of the Gucci brand, 20% of comparable revenue growth still led the group's three major brands, with an increase of less than half of 48.7% in the same period last year and less than 28.1% in the fourth quarter, mainly because the growth rate of the most aggressive North American market in the same period last year dropped from 64.4% to 5%.

Jean-Marc Duplaix, chief financial officer of Open Cloud group, described the performance of Gucci in the first quarter of the month at the monthly quarterly report analyst telephone conference, with the expectation of "normalization".

Jean-Marc Duplaix pointed out that the base effect, the decline of passenger expenditure, the weakening of consumer confidence and the delayed arrival of some styles all affected the sales in North America.

JP Morgan Chase & Co. analyst at JP Morgan believes that the US stock market crash at the end of last year also weakened the consumer desire of local customers at the beginning of this year.

Jean-Marc Duplaix also revealed that customers in mainland China maintained a "super high" demand for Gucci Gucci under the stimulus of tariffs and other policies. He believed that the contribution of Chinese consumers to the global sales of the brand would be raised to 35% by the end of the year.

This also proves that the luxury industry's dependence on the single market is becoming more and more serious. In the first quarter, the Asia Pacific region accounted for 42% of Gucci revenue, up 5 percentage points from the same period last year.

However, after the release of the quarterly report, the French group's impact on the open market continued to come to an abrupt end, with a record high of 539.80 euros before its earnings.

With the unique combination of Alessandro Michele, the creative director of the retro gorgeous aesthetics and CEO Marco Bizzarri of outstanding management capability, Gucci has achieved phenomenal takeoff in the past two and a half years, and has become the most popular luxury brand in the world, and has more and more of the next generation of luxury buyers.

In 2018, Gucci Gucci's revenue exceeded 8 billion euros, an annual increase of 33.4%, further consolidating its position as the world's third largest luxury brand after Louis Vuitton Louis Weedon and Chanel Chanel.

Author: Flower broken