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PPR Sales Rise in Q3

French firm PPR reported a 12.9 percent increase in sales in the period, fueled by strong demand for designer handbags and a return to growth at Redcats.

The Gucci 1973 bag.

PARIS — French retail-to-luxury firm PPR on Thursday reported a 12.9 percent increase in sales in the third quarter, fueled by strong demand for designer handbags, especially in emerging markets, and a return to growth at mail-order division Redcats.

“Each of our major luxury brands achieved double-digit growth, our retail businesses made solid progress and Puma’s sales rebounded,” PPR chairman and chief executive officer François-Henri Pinault said.

“Our very good overall performances are fueled by vigorous marketing momentum, notably online and internationally,” he added.

PPR — whose assets range from furniture chain Conforama to luxury brand Gucci — posted sales of 4.45 billion euros, or $5.7 billion, in the three months to Sept. 30 versus 3.95 billion euros, or $5.6 billion, in the same period a year earlier, an increase of 7.3 percent on a comparable basis.

Dollar figures are converted at average exchange rates for the periods in question.

Revenues in the first nine months of the year rose 6.7 percent to 12.59 billion euros, or $16.6 billion, from 11.79 billion euros, or $16.1 billion, in the first three quarters of 2009.

The Gucci Group division — whose brands range from Yves Saint Laurent to Bottega Veneta and Sergio Rossi — reported revenues of 1.04 billion euros, or $1.34 billion, in the third quarter compared with 819 million euros, or $1.17 billion, in the year-ago quarter — up 27.1 percent in reported terms and 16.7 percent in comparable terms.

“Accounting for currency differences, we are now for the most part trading at or above the levels we had seen at the peak of the market,” PPR chief financial officer Jean-François Palus told analysts in a conference call.

Luxury brand Gucci saw strong demand for classic handbag styles and novelties such as the Gucci 1973, especially in Western Europe, where overall sales for the brand rose 27.7 percent in the third quarter, with France, Italy and the U.K. all posting solid growth.

“A significant portion of the growth reflects the increase in tourist flows, notably Chinese customers,” said Palus, noting these tourists were also spending more on average.

Gucci’s performance in North America has gradually improved since new management was put in place to fix mistakes that resulted in product shortages in the first two quarters. The region registered a modest sales increase of 0.5 percent in the three months to Sept. 30.

Palus said that, overall, Gucci’s inventories were healthy ahead of the crucial Christmas selling season. “In luxury, the planning was done adequately and we don’t have any shortage issue,” he said.

However, the luxury brand is planning to increase the price of its handbags — which account for 60 percent of its overall sales — by 5 percent in Europe over the next few months to reduce the spread between prices there and in the U.S., China and Japan, Palus added.

Book, music and electronics retailer Fnac registered a 4.3 percent rise in the third quarter with revenues of 999.4 million euros, or $1.29 billion, while sales at Conforama rose 9.8 percent to 821.2 million euros, or $1.06 billion.

Mail-order division Redcats, which sells a range of apparel and household items via catalogue and the Internet, registered its best quarterly performance in three years, with sales up 8.4 percent in reported terms to 815.7 million euros, or $1.05 billion.

Revenues at German activewear firm Puma rose 16.5 percent to 784.3 million euros, or $1.01 billion, from 673.4 million euros, or $868.8 million, a year ago.

Pinault has said repeatedly that PPR will not make any “significant” acquisitions before disposing of its retail banners, which it put on the block last year but has so far held on to in hopes of securing higher bids. Palus confirmed media reports that PPR has hired Rothschild to explore financing options with banks for potential buyers of Conforama.

Turning toward the fourth quarter, Palus said luxury continued to gain momentum in October and he was confident other segments would follow.

“We are quite confident for the rest of the year, not only to post very good and healthy growth in sales, but also to continue to post increasing performances in both operating income and cash flow,” he said.

“We are of course vigilant because, like for forex, consumer sentiment can change, but for the time being, it’s all good,” he added.

In related news, Pinault offered his condolences following the unexpected death of Luigi Macaluso, chairman and president of the Sowind Group, the Swiss haute horlogerie firm which makes the upscale Girard-Perregaux and JeanRichard brands. PPR owns a 23 percent stake in the group.

“Luigi Macaluso was a symbolic figure in the traditional watchmaking world,” Pinault said.