PARIS — Improved sales at Gucci and Puma helped lift PPR to better-than-expected second-quarter sales.
This story first appeared in the July 24, 2008 issue of WWD. Subscribe Today.
Sales in the three months through June 30 improved 4.5 percent to 4.97 billion euros, or $7.77 billion, from 4.47 billion euros, or $6.99 billion, in the year-ago period, headlined by 8.8 percent growth in luxury and 6.3 percent growth at Puma. Currency conversions were made at average exchange rates for the respective periods.
The numbers, released after the market closed here, slightly bested analysts’ expectations. PPR’s stock closed up 5.25 percent to 66.60 euros, or $103.71. The sales results also signaled health in a chaotic economy among Europe’s key luxury players after strong numbers released earlier this month by Hermès, Burberry and Compagnie Financière Richemont.
Overall luxury sales grew 16 percent before the impact of currency exchange rates, led by high double-digit growth in “booming” emerging markets, particularly Asia, outside of Japan. Luxury sales in China alone rocketed 83 percent, PPR said, while sales of luxury in Europe grew 14 percent and improved 10 percent in the U.S. Sales at the Gucci brand improved 3.8 percent to 504.7 million euros, or $789.01 million, reversing the negative trend of the first quarter when sales fell 3.3 percent. Before the impact of currency exchange rates, Gucci’s sales in the quarter grew 11 percent, PPR said.
Jean-François Palus, PPR deputy chief executive officer and chief financial officer, said on a conference call that Gucci sales “significantly accelerated” in the second quarter after tough business early this year. “The second quarter showed a real improvement in Europe and the U.S.,” said Palus. The most spectacular growth, however, was delivered by emerging markets, with sales in Asia, excluding Japan, improving 40 percent and sales in the Middle East growing 60 percent.
Palus said Gucci sales improved by “high-single digits” in the continental U.S., but were dampened by fewer Japanese tourists in Hawaii. He said fewer Japanese and American tourists in Europe affected sales on the Continent, despite more Russian visitors.
Palus said Gucci’s business in Japan remained “challenging.” Overall luxury sales in Japan “slightly declined” in the quarter, he said. Palus called the economic climate “turbulent” and said the deteriorating value of the dollar against the euro had a greater-than-expected impact on total sales.
Mature markets faced the “twin headwinds” of a tough economic climate and adverse currency exchange rates, but, he said, “emerging markets continue to benefit from a favorable dynamic.”
Palus said current trading was “very good” and “that [PPR] has the same momentum in luxury” so far in July.
Bottega Veneta continued its strong performance, reporting that sales increased 13.6 percent to 91.2 million euros, or $142.5 million, with sales in Asia, excluding Japan, growing 56 percent. Bottega sales growth slowed to single digits in Japan.
At Yves Saint Laurent, sales gained 25.4 percent to 57.1 million euros, or $89.3 million, bolstered by emerging markets. Sales at the so-called other brands — Balenciaga, Boucheron, Stella McCartney and Alexander McQueen — improved 23.9 percent to 107.9 million euros, or $168.7 million.
Puma sales grew 6.3 percent, fueled by double-digit growth in apparel and accessories.