WWD.com/beauty-industry-news/financial/gucci-gains-help-boost-ppr-4q-sales-586183/
government-trade
government-trade

Gucci Gains Help Boost PPR 4Q Sales

Double-digit increases at Gucci Group led to PPR's 7.4 percent sales gain in the fourth quarter to $9.35 billion.

NEW YORK — France’s PPR on Thursday said fourth-quarter sales increased 7.4 percent to 7.21 billion euros, or $9.35 billion, lifted by double-digit increases at Gucci Group in the last two months of the year.

The retail and luxury conglomerate, which has just shortened its name from Pinault-Printemps-Redoute, said better-than-expected, like-for-like luxury sales rocketed 16.3 percent in November and December, driven by high-margin leather goods such as Gucci’s Flora line.

Serge Weinberg, PPR chairman, said the group’s luxury sales were expanding at a similar clip in January and that he was “optimistic” for the rest of the year.

Fourth-quarter comparable sales at the Gucci division, which counts Yves Saint Laurent, Bottega Veneta, YSL Beauté and brands such as Alexander McQueen and Boucheron, rose 10.7 percent to 1.23 billion euros, or $1.6 billion, PPR said. Dollar figures are at the average exchange rate.

The sales represented the last five months through Dec. 31, as PPR harmonizes Gucci’s reporting schedule with its own financial calendar. PPR took full control of Gucci last spring.

Weinberg said luxury growth had been strong in all locations except Japan. For example, in the Asia-Pacific region, excluding Japan, Weinberg cited sales growth of 40 percent over the last two months.

For the Gucci brand, sales increased 9 percent in the quarter, but were up 16 percent in November and December. For the three months through Oct. 31, Gucci sales were 376.1 million euros, or $475 million, while they hit 332.8 million euros, or $428 million, in November and December alone.

Weinberg said leather goods sales at Gucci increased 24 percent, while footwear was up more than 30 percent.

Bottega sales, driven by lines such as Veneta and Baby Bag, boomed 49 percent to 28.1 million euros, or $36.5 million, in the quarter on a comparable basis, Weinberg said, and were up 52 percent in November and December.

At the money-losing Yves Saint Laurent brand, sales of 45.4 million euros, or $58.9 million, in the fourth quarter represented a 13.4 percent improvement, which was led by increases in Asia-Pacific and the U.S. For the year, YSL sales were 169.2 million euros, or $210.5 million, up 10.9 percent.

This story first appeared in the January 28, 2005 issue of WWD.  Subscribe Today.

Nonetheless, analysts continue to voice skepticism about turnaround prospects at the iconic YSL. In a note to investors Thursday, HSBC analyst Antoine Belge said YSL’s performance “was not particularly impressive for a business which has seen so many store openings in the past two years.”

At YSL Beauté, sales grew 3.1 percent in the quarter to 630.4 million euros, or $817.7 million. Weinberg said they rose 14 percent in the last two months of the year, boosted by YSL’s new fragrance, Cinema.

Weinberg said the turnaround at Boucheron was beginning to bear fruit, and that sales at the jewelry house increased 20 percent over the last two months.

“All of our main brands gained market share despite the difficult trading environment,” said Weinberg, adding that the results proved the soundness of PPR’s decision two years go to concentrate on the high-margin luxury trade by divesting its business-to-business activities.

At its retail division, which includes the Printemps department store and the Redoute mail-order business, PPR said sales grew 3.9 percent in the fourth quarter, as spending recovered somewhat in its main French market.

At Printemps, sales increased 2.3 percent to 307.9 million euros, or $399.4 million, led by strong sales in beauty and luxury at the chain’s Boulevard Haussmann flagship.

Redcats mail-order sales dropped 2 percent to 1.24 billion euros, or $1.61 billion, hurt by unfavorable currency exchange rates, while sales grew 7.9 percent to 1.5 billion euros, or $1.94 billion, at the Fnac music and book retailer and 5.8 percent to 943.9 million euros, or $1.22 billion, at the Conforama furniture chain.

At the CFAO African trading company, sales increased 7.4 percent in the quarter to 478.7 million euros, or $620.9 million.

PPR, which will give profits on March 17, said full-year sales declined 0.6 percent to 24.21 billion euros, or $30.11 billion, reflecting disposals made of its business-to-business activities as it completed a strategic shift to focus on retail and luxury.

The company’s stock fell 0.12 percent to close at 80.90 euros, or $105.44 at current exchange, in trading on the Paris Bourse.