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PPR Sticks to Organic Growth

Francois-Henri Pinault, chairman of PPR, on Thursday said Gucci Group sales in April climbed along the same lines as the 14.6 percent constant-currency increase the French retail and luxury conglomerate reported in the first quarter.

PARIS — Francois-Henri Pinault, chairman of PPR, on Thursday said Gucci Group sales in April climbed along the same lines as the 14.6 percent constant-currency increase the French retail and luxury conglomerate reported in the first quarter.

Pinault added that sales at PPR’s retail concerns, including the Printemps department stores and the Fnac music and book chain, rose about 3 percent in April, despite the difficult economic environment in France and elsewhere in Continental Europe.

Addressing the annual shareholders’ meeting for the first time since he took over as chief executive from Serge Weinberg last March, Pinault said the firm would concentrate on organic growth. Answering a question that referenced remarks by his luxury rival, LVMH Moet Hennessy Louis Vuitton chairman Bernard Arnault, Pinault said PPR would not bid if a major luxury brand came up for sale. At the LVMH shareholders’ meeting last week, Arnault predicted some big luxury brands would fall on tough times in the next few years. Arnault said he would be ready to buy at the right price.

“We won’t be buying,” Pinault told shareholders. He reiterated a goal set in December by Gucci Group chief executive Robert Polet to increase luxury sales at least 10 percent a year.

Pinault also reminded investors that Polet was aiming to double the size of the Gucci brand in seven years. Polet also had set 2007 break-even deadlines for the luxury division’s emerging brands, which include Balenciaga, Alexander McQueen and Stella McCartney.

Pinault was upbeat on luxury, though he declined to set a break-even date for the Yves Saint Laurent fashion house, which last year lost 69.3 million euros, or $87.6 at current exchange. But he reported progress had been made to climb out of the red at other businesses, citing strong sales at Balenciaga and Bottega Veneta.

At Boucheron, he said the fine jewelry house recently sold a $7 million jewelry item. “That immediately improves the figures,” he quipped.

As reported, PPR’s net income last year increased 45.9 percent to 940.6 million euros, or $1.18 billion at average exchange rates, reflecting buoyant luxury sales and asset disposals. Sales last year declined 0.6 percent to 24.21 billion euros, or $30.5 billion.

Meanwhile, PPR disclosed the details of the golden goodbye it gave Weinberg, who left as PPR chairman in March. Weinberg, who has set up a private investment firm, received a 5.3 million euros, or $6.7 million, payment, or the equivalent of two years’ salary. He has a two-year noncompete clause and sits on the Gucci and Fnac boards.

His retirement package provides for a 600,000 euro, or $756,000, annual payment when he turns 60. Otherwise, Weinberg, 52, can opt for a one-time cash retirement payment of 11 million euros, or $13.86 million, today, or an 8 million euro, or $10.1 million, payment when he turns 60.