The retail-to-luxury group on Wednesday reported its first quarterly sales increase since the start of the recession, saying revenues inched up 1.2 percent in the first three months of the year, boosted by strong sales at Gucci Group.
First-quarter group sales totaled 4.12 billion euros, or $5.7 billion, versus 4.08 billion euros, or $5.3 billion, in the same period a year earlier. Dollar figures are converted at average exchange rates for the period.
“The sharp improvement in sales of all of our businesses in the first quarter provides us with a solid platform to speed up revenue growth throughout the year,” PPR chairman and chief executive officer François-Henri Pinault said. “We should deliver a healthy progression in operating and financial performances in 2010.”
PPR chief financial officer Jean-François Palus noted in a conference call that the consolidated sales increase followed five consecutive quarters of declines.
“Recovery was uneven in the world economy. The upturn in emerging countries is robust and sustainable, notably in Asia. Most industrialized countries are no longer on the decline, but growth remains sluggish there,” he said, noting the eurozone was affected by the end of stimulus measures and high unemployment rates, while the U.S. recovery was faster than in Europe.
“Our priority in 2010 is to fuel the momentum in top-line growth, and as we do this, we continue to work hard on enhancing our growth margins. We are also focused on tightly monitoring our working capital requirements, particularly inventories,” he said.
Sales at books and electronics retailer Fnac were up 2.4 percent in the quarter to 982.2 million euros, or $1.3 billion, while mail-order division Redcats logged revenue of 843.7 million euros, or $1.2 billion, down 2.6 percent versus the same period in 2009. Sales at furniture chain Conforama were up 2.9 percent to 730.1 million euros, or $1.0 billion, and Puma sales slipped 2.1 percent to 683.1 million euros, or $946.5 million.
The Gucci Group division, which includes Gucci, Bottega Veneta and Yves Saint Laurent, garnered revenues of 894.8 million euros, or $1.2 billion, up 4.7 percent from 854.8 million, or $1.1 billion, in the year-ago quarter. Bottega Veneta logged the strongest individual performance, with a quarterly sales increase of 9.5 percent, while Gucci saw sales rise 3.8 percent.
Leather goods did particularly well at Gucci. Sales in directly operated stores rose 7 percent in the quarter while wholesale lagged, though Palus said he expected wholesale to pick up in the latter half of the second quarter, given that orders for the fall-winter collection were up by double-digits.
Gucci saw sales jump 37 percent in Greater China. Revenues increased 11 percent in Western Europe but fell 9 percent in the U.S., partly because it failed to anticipate the sharp rebound in demand there.
“We were quite surprised at the beginning of the quarter by the strength of the pickup in demand in the U.S. and actually we didn’t always have the inventory on hand to fully satisfy demand,” said Palus. “This has been adjusted swiftly with very good performance in March and even better in April.”
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