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PARIS — PPR said Thursday that revenues rose 16.3 percent in the third quarter, as its luxury brands continued to post strong gains across all geographic regions, compensating for a weaker performance in the sport and lifestyle segment.
This story first appeared in the October 26, 2012 issue of WWD. Subscribe Today.
PPR posted revenues of 2.56 billion euros, or $3.2 billion, in the three months to Sept. 30, versus 2.20 billion euros, or $3.12 billion, in the same period a year earlier, up 6.6 percent on a comparable basis.
Dollar figures are converted at average exchange rates for the periods to which they refer. The group restated its 2011 accounts to strip out revenues from Fnac, following the announcement that PPR plans to demerge and float the struggling books, music and electronics retailer in 2013.
Following a similar move earlier this year to exclude sales at catalogue retailer Redcats, which is up for sale, this puts PPR on track to complete its transition to become a pure player in apparel and accessories.
“The luxury division continues to report outstanding growth propelled by the momentum of our brands across all of the group’s regions. We are also pursuing the group’s strategic transformation,” PPR chairman and chief executive officer François-Henri Pinault said.
“This quarter’s impressive performance bears witness to the complementary nature and growth potential of our brands, the strength of the group and the balanced footprint of our businesses. This reinforces our confidence in PPR’s ability to deliver sustained revenue growth, along with gains in operating and financial performance, over the full year,” he added.
The results came on the heels of figures showing sales at LVMH Moët Hennessy Louis Vuitton rose 14.8 percent in the third quarter, while Burberry revenues were up 2.6 percent in its fiscal second quarter ended Sept. 30.
PPR’s luxury division — spearheaded by Gucci, Bottega Veneta and Saint Laurent — posted revenues up 24.3 percent to 1.59 billion euros, or $1.99 billion, in the third quarter compared with 1.28 billion euros, or $1.81 billion, in the year-ago period.
Sales in the sport-and-lifestyle division grew 5 percent to 969.7 million euros, or $1.21 billion, versus 923.7 million euros, or $1.31 billion, during the same period last year.
Revenues were sapped by the disappointing performance of California action-sports brand Volcom, which lost sales as a result of late deliveries, while Puma has launched a restructuring plan to counter poor European sales.
The German sporting goods giant saw consolidated sales rise by 6 percent in the third quarter to 892.2 million euros, or $1.12 billion, but net profits plummeted 85.1 percent during the period.
Meanwhile, signaling its ambitions in the burgeoning outdoor sports category, Puma and PPR are expected to appoint Markus Wonko as ceo of Tretorn Group, a new post at the Swedish heritage brand owned by Puma, WWD has learned. An announcement could come as soon as today.
Wonko is to join Tretorn, headquartered in Helsingborg, Sweden, at the beginning of 2013 with a mission to ramp up the product range and international footprint. Founded in 1891, Tretorn is best known for its rubber boots, sneakers, outerwear and tennis balls.
Wonko is to join Tretorn after an 11-year career at Adidas Group, most recently as a member of the Reebok Asia-Pacific management team in Hong Kong.
PPR group managing director Jean-François Palus said the piecemeal disposal of catalogue retailer Redcats was moving ahead as expected, and will likely begin with the sale of its U.S. operations, in addition to children’s brand Vertbaudet and family brand Cyrillus.
“The discussions regarding the U.S. operations are well advanced, and the discussions regarding the children’s and family brands have been initiated,” he said during a conference call.
Palus added that the information memorandums for its Nordic brands were being finalized. “The process will be triggered in the middle of the month of November for a conclusion in the course of the first quarter, and then the process for La Redoute and the French brands will be triggered after that,” he said.
Chief financial officer Jean-Marc Duplaix noted that Gucci posted high-single-digit organic growth in China in the third quarter, with growing demand for nonlogo and precious skin products, though retail sales continued to suffer in South Korea and Taiwan, with no improvement likely until 2013.
“There is clearly an upgrade of the Gucci brand in China that will allow the brand to benefit from this growing taste for sophisticated products, but we will still keep the pillar of fashion and fashion products to address a certain demand,” he said.
“There is now a split in the way Chinese consumers buy between tier-one, tier-two and tier-three cities, and we see that of course in tier-one cities, the tastes of customers are going to be somewhat more sophisticated and the markets are tougher, but we believe and we are convinced that we have the right strategy with Gucci,” he added.
Duplaix said Gucci added nine stores in Mainland China during the first nine months of the year, noting that it had started to slow down the rate of store expansion in 2011.
“The pace of store openings is normalizing in China, and overall in the world,” he said. “We will selectively seize the opportunity for store openings in tier-one cities, and we will surely focus more on refurbishment and enlargement, and in tier-two and tier-three cities, we will have a strategy of selectively opening stores.”
The cfo said all the group’s luxury brands were on track to improve profits.
“We are still considering that we will maintain and improve the margin of all of our brands, not only Gucci but also Bottega Veneta, so luxury brands will have operating profitability improve all over the year,” he said.