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PARIS – Powered by a buoyant luxury sector and improvements at its retail division, PPR saw net profits rocket 28.0 percent last year to 685 million euros, or $898.7 million, from 535 million euros, or $701.9 million, a year earlier.
An upbeat Francois-Henri Pinault reiterated a commitment to both businesses, squelching speculation about a further paring of its retail pole in favor of higher margin luxury goods.
“The principle of diversification is very important to me,” Pinault told analysts Thursday in discussing 2006 results, which bested expectations. “We have always built our group on two main divisions … which are complimentary.”
Forecasting further improvements in 2007 performance, Pinault said PPR would ramp up store renovations in luxury and retail to boost productivity. He noted, for example, that a switch from horizontal to wall-mounted displays of eyewear in Gucci stores resulted in a 30 percent sales bump.
Group operating profits rose 19.9 percent to 1.275 billion euros, or $1.67 billion, versus 1.063 billion euros or $1.39 billion a year ago. All conversions are made at current exchange rates.
PPR also noted that retail sales in January and February accelerated from the fourth quarter, while luxury sales were “broadly in line.”
For complete coverage see tomorrow’s issue of WWD.