By  on April 29, 2005

PARIS — PPR said Thursday that lusty demand for Gucci shoes and bags, especially the Flora line, lifted the French luxury and retail groups’ revenues in the first quarter.

Sales of leather goods at Gucci bounded more than 25 percent, propelling sales at the Italian company up 14.2 percent to 429.9 million euros, or $564.2 million at average exchange.

Overall, PPR’s luxury division reported sales were up 10 percent to 711.5 million euros, or $933.8 million, the latest indication of a robust environment for Europe’s key luxury players.

Earlier this week, Switzerland’s Compagnie Financière Richemont reported a 10.1 percent hike in sales for its fiscal year ended March 31. Meanwhile, LVMH Moët Hennessy Louis Vuitton said its first-quarter sales improved 9.8 percent.

The gains at PPR’s luxury division helped offset mild increases at its retail arm, such as the Printemps department store chain and the Redcats catalogue business, which were stalled by weak consumer spending in France and elsewhere in Europe.

PPR said its sales in the three months through March 31 improved 2.2 percent to 4.11 billion euros, or $5.39 billion, from 4.02 billion euros, or $5.27 billion, a year ago, largely in line with analysts’ consensus expectations.

PPR’s stock fell 1.6 percent to close Thursday at 75.60 euros, or $97.52 at current exchange, in trading on the Paris Bourse.

“It’s a satisfying performance in a difficult environment,” said François-Henri Pinault of the results, speaking on his first conference call to analysts and reporters since taking over as PPR’s chief executive from Serge Weinberg last month.

Though Pinault trumpeted the stellar leather goods sales at the Gucci brand, he reported lackluster sales of clothing — including at most of the division’s other labels, which also include Yves Saint Laurent, Stella McCartney, Alexander McQueen and Balenciaga.

He called the flat ready-to-wear sales endemic to the industry, and said he hoped for a pickup later this year.

At the money-losing Yves Saint Laurent house, sales dropped 3.6 percent to 39 million euros, or $51.2 million at average exchange, marred by logistical problems and meager wholesale orders from retailers. Pinault said retailers had taken a “cautious” attitude in ordering YSL since they had “poor sales in the past.”But he heralded designer Stefano Pilati’s first collection for the Paris label as an “important” first step in relaunching the brand.

He said the logistical snafus that hurt YSL by causing late deliveries had been resolved. Pinault said new YSL president Valerie Hermann was working on implementing merchandising strategies to lift the house out of the red.

Sales of YSL leather goods improved 9.1 percent, while sales of women’s clothing gained 11.5 percent in the quarter.

YSL sales increased 3.9 percent in Japan, 6 percent in the rest of Asia and 2.4 percent in Europe. They were flat in the U.S.

YSL Beauté’s sales gained only 0.9 percent due to a “difficult” fragrance market, Pinault said. YSL Beauté’s sales in the period tallied 140.6 million euros, or $184.5 million.

Sales rocketed 46.7 percent to 32.6 million euros, or $42.8 million, at Bottega Veneta. Pinault said the brand was “moving rapidly to reach the 200 million euro goal in annual sales” that Gucci Group chief executive Robert Polet set in December as part of a wide-ranging strategy presentation.

Bottega Veneta performed well across all regions: up 40.7 percent in North America; up 49.7 percent in Europe; up 60.6 percent in Japan, and up 67.7 percent in the rest of Asia.

Among Gucci Group’s “other” brands, where sales rose 9.8 percent to 69.4 million euros, or $91.1 million, Pinault singled out “good activity” at Balenciaga, Alexander McQueen and Boucheron.

He said there was room for improvement at Sergio Rossi, where Isabelle Guichot, formerly president of rival luxury conglomerate Richemont’s Van Cleef & Arpels and Lancel businesses, was recently named president.

Meanwhile, in PPR’s other retail activities, sales increased 0.7 percent to 3.4 billion euros, or $4.46 billion, affected by weak consumer spending in France and elsewhere in Europe.

Sales at the Printemps department stores slipped 1.4 percent and sales at the Redcats cataloguer moved up 1.3 percent.

PPR’s other retail operations include the Fnac book and music chain and the CFAO African trading operation.

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