Net profit dropped from slightly more than 1.0 billion euros in 2012 to 49.6 million euros last year ($68.0 million), the group said in a statement.
Kering shares dropped 3.45 percent to 149.65 euros in morning trading.
Such a profits fall is particularly unusual in the French luxury products sector which comprises many top global brands and has been boosted by broad expansion into emerging markets over several years.
Kering, previously known as PPR, said the setback was caused largely by exceptional charges to withdraw from retailing and mail-order, and to refocus the business on its high-end luxury products and markets.
Chief executive Francois-Henri Pinault said that overall, backed by strong brands, the group was "well positioned to press ahead with our strategy" and he was confident that it could improve on sales last year and on recurrent operating performance.
The plunge in profit was the result of exceptional items totalling about 1.2 billion euros.
Among these were 315 million euros for the recapitalisation of the Redoute mail-order group which is being sold, and writedowns for the Puma and Redcats fashion subsidiaries, as well as the costs of floating cultural products retailer Fnac.
Slump foreseen
Kering, which also owns the Bottega Veneta handbag and leatherware brand, had warned in November that net profit for the year would fall heavily.
Excluding the blow from exceptional items, net profit fell by 3.1 percent to 1.23 billion euros. Analysts polled by Factset had expected this figure to be 1.15 billion euros.
Current operating profit also fell, by 2.3 percent, to 1.75 billion euros, slightly below expectations, but the margins held up at 18.0 percent from 18.4 percent in 2012.
These results were achieved on the back of almost stable sales totalling 9.75 billion euros, marking however a sudden slowdown from growth of 20.8 percent in 2012.
Pinault said in a results statement: "2013 was a pivotal year for Kering during which we completed our transformation, adopted a new identity and continued on our growth path by posting solid operating and financial performances.
"These results were driven by good sales and profitability advances from the Luxury Division."
But as expected, results had fallen from sports and lifestyle activities "amid major changes at Puma aimed at rebuilding the brand's commercial momentum," Pinault said.
The board recommended holding the dividend payout to shareholders at 3.75 euros per share.
Gucci handbags carry the group
The driving luxury division now has 15 brands following the acquisition last year of Pomellato, Dodo, Qeelin and Christopher Kane.
Luxury sales overall rose by 4.2 percent to 6.47 billion euros, or by 7.2 percent on a comparable asset base and exchange rates.
Current operating profit by these activities rose by 4.4 percent, and profitability rose to a record 26.0 percent from 25.9 percent in 2012, finance director Jean-Marc Duplaix told a telephone press conference.
Gucci, which is being re-positioned more specifically on leatherware and higher up market, reported that sales fell by 2.1 percent to 3.56 billion euros, although they rose by 2.2 percent on a comparable basis.
Operating profit rose by only 0.5 percent to 1.13 billion euros.
However, this Italian subsidiary generated two thirds of Kering's current operating profit and raised its margin to 31.7 percent.
Sales by the lifestyle division, dominated by Puma, fell by 8.1 percent to 3.25 billion euros or by 2.8 percent on a comparable basis. Current operating profit fell by more than 100 million euros, or by a third.
Contacts
Press
Paul Michon +33 (0)1 45 64 63 48 paul.michon@kering.com
Hélène Saint-Raymond +33 (0)1 45 64 61 20 helene.saint-raymond@kering.com
Analysts/investors
Claire Roblet + 33 (0)1 45 64 61 49 claire.roblet@kering.com
Edouard Crowley + 33 (0)1 45 64 63 28 edouard.crowley@kering.com
Sourece AFP and Kering group
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