MILAN — PPR is getting more serious about e-commerce.
This story first appeared in the August 6, 2012 issue of WWD. Subscribe Today.
The luxury group has formed a joint venture with Yoox SpA to accelerate the online development of its various brands. PPR owns 51 percent of the new venture, while the Italian e-tailer owns the remainder.
The venture, incorporated in Italy and operating worldwide, manages monobrand online stores in collaboration with several PPR brands: Bottega Veneta, Yves Saint Laurent, Alexander McQueen, Balenciaga and Sergio Rossi. The Sergio Rossi and Bottega Veneta online stores will be launched first, by the end of 2012. All digital stores will be operating globally, including in China, by the end of 2013. Each PPR brand will be in full control of its online store and will be in charge of product assortment, editorial content, art direction and digital communication.
PPR said it “may in [the] future decide to involve other brands in the joint venture.”
After seven years, PPR and Yoox will have the right to exercise call and put options, respectively, for the Yoox stake in the joint venture.
“E-business is a strategic priority for the group. PPR’s mission is to be the engine behind all our brands so that they each fully realize the potential for organic growth that they all enjoy. This joint venture will allow PPR to generate synergies and shared resources available to our brands through best-in-class e-commerce expertise,” said François-Henri Pinault, chairman and chief executive officer of PPR.
PPR e-Business vice president Federico Barbieri pointed to the relevance of “innovative and original solutions to create real online luxury experiences for the customers of our brands, instead of having just good e-commerce stores.”
In addition to its multibrand stores Yoox.com, Thecorner.com and Shoescribe.com, Yoox manages online stores for brands ranging from Giorgio Armani to Ermenegildo Zegna.
On Friday, Yoox reported a drop in net profit in the first six months of the year, while revenues increased.
In the period ended June 30, net profit decreased 25.6 percent to 2.2 million euros, or $2.8 million, compared with 2.9 million euros, or $4.2 million, in the same period last year. The company attributed the drop to “investments in the automation of the global operations and distribution platform, which has been fully operational since the third quarter of 2011, and partly to the investments in innovation and technological consolidation.”
Revenues gained 31.7 percent to 172.9 million euros, or $223 million, compared with 131.2 million euros, or $190.2 million, in the corresponding period a year earlier.
Dollar amounts have been converted at average exchange for the periods to which they refer.
The multibrand business reported sales of 120.6 million euros, or $155.5 million, up 23.2 percent from last year, and accounted for 69.7 percent of total group revenues.
The group’s monobrand online stores, totaling 34 at the end of June, posted revenues of 52.3 million euros, or $67.4 million, up 56.6 percent from last year. This division accounted for 30.3 percent of total sales. Four new stores were launched in the first half, for Barbara Bui, Pringle of Scotland, Pomellato and Alexander Wang.
All markets, except Italy, posted growth in the first half. Exports in the period accounted for 84.5 percent of sales. The U.S., which remains the group’s main market and accounted for 21.6 percent of sales, showed a 47.5 percent increase to 37.4 million euros, or $48.2 million, representing 21.6 percent of revenues. Japan was up 74.4 percent, while sales in other countries almost tripled, climbing 189.3 percent to 6.1 million euros, or $7.9 million, from 2.1 million euros, or $3 million. Europe, excluding Italy, rose 27.2 percent, lifted by a strong performance of France, Germany, the U.K. and Russia.
As of June 30, the group’s net financial position remained positive, standing at 8.4 million euros, or $10.8 million, compared with 12.9 million euros, or $18 million, at the end of December 2011. Yoox attributed this cash absorption to capital expenditures of 12.9 million euros, or $16.6 million, in investments in technology, distribution and operations.
Yoox said it was “reasonable to expect” that the group will continue to grow its revenues and earnings before interest, taxes, depreciation and amortization in the remaining months of 2012, “likely” lifted by the international markets, and led by the U.S.