Byline: Robert Murphy

PARIS — Citing its retail and luxury activities as key revenue generators, diversified French distribution conglomerate Pinault-Printemps-Redoute Wednesday said consolidated sales for 2000 surged 26.8 percent to $23.2 billion.
Factoring in exchange rate fluctuations and acquisitions, PPR said organic growth was 7.8 percent, compared to 3.7 percent in 1999.
Analysts characterized the increase as slightly above expectations and indicative of the healthy retail climate in France and continental Europe.
Nonetheless, PPR stock slid 2.6 percent in trading on the Paris Bourse to close Wednesday at $211.76.
Some analysts attributed the drop to investor profit-taking, while others said it was a result of the prospect of today’s scheduled hearing pitting PPR, controlled by Francois Pinault, against LVMH Moet Hennessy Louis Vuitton, the luxury group headed by Pinault archrival Bernard Arnault.
As reported, LVMH has asked the Enterprise Chamber of Amsterdam’s Court of Appeals to launch an investigation into mismanagement at Gucci and, ultimately, annul its alliance with PPR. A decision could come today or be delayed as long as six weeks. PPR stepped in as Gucci’s white knight in a hostile takeover attempt by LVMH in 1999 and the rival groups have been fighting in court ever since.
Meanwhile, LVMH, which on Tuesday reported its own sales last year rocketed 35 percent to $10.9 billion, also saw its stock slide. It was down 4.66 percent to $65.12. Separately on Wednesday, Christian Dior SA, parent of LVMH and Christian Dior Couture, announced 2000 sales in line with LVMH’s Tuesday results: a 35 percent increase to $11.1 billion. Sales at Christian Dior Couture leaped 35 percent to $277.4 million. Dollar figures have been converted at current exchange.
In a statement, PPR chairman Serge Weinberg said PPR “kept up the pace of business development during the second half of 2000. The increase in full-year sales reflects very strong organic growth, especially in the retail and luxury goods divisions.”
PPR’s retail sales, excluding Internet revenues, expanded 14 percent to $9.9 billion. “This robust growth was attributable to the commercial prowess of all the company’s divisions, both in France and internationally, backed by new store openings and continued strong sales by Redcats,” PPR said in the statement. Redcats is PPR’s mail-order division.
Analysts said performances from the Printemps department store chain and Redcats exceeded their forecasts. Christian Devisimes, analyst at Natexis Capital here, attributed the growth to a strong performance in the fourth quarter from both divisions. “The fourth quarter is usually strong for retailers, but it was very strong for PPR this year,” he said.
“The French retail sector is healthy,” agreed Nicolas Champ, analyst at Credit Lyonnais Securities Europe. “PPR’s fourth-quarter performance was strong.”
Fourth-quarter sales at Printemps grew 10.7 percent, compared to an increase of 3.2 percent through the first nine months of 2000. For its part, Redcats’ sales increased 5.2 percent in the last three months, compared to 4 percent through the third quarter.
For the year, sales at the Printemps chain of 30 stores increased 5.6 percent. Growth was most significant at the chain’s flagship Boulevard Haussmann unit, which racked up a 9.1 percent increase. PPR said this was due to strong performances at its recently renovated Printemps de l’Homme men’s store, whose sales increased 22.4 percent.
Sales at Gucci Group, in which PPR holds a 42 percent stake, were up 181.4 percent to $2.07 billion. That figure, which includes sales at Yves Saint Laurent, YSL Beaute, shoemaker Sergio Rossi and four months of sales at Boucheron, corresponds to figures Gucci reported for the period from November 1999 to October 2000.
Meanwhile, sales at specialty stores grew 38 percent, including a 24.4 percent increase for the Orcanta lingerie retailer and 93.8 percent increase for the Made in Sport units.
For Redcats, sales grew 9.9 percent, excluding Internet activities. Across geographic regions, divisional sales were up 2.1 percent in France and 6.2 percent elsewhere. PPR said the increase was driven by its La Redoute activities in France as well as its American-based catalog business, Brylane.
Sales at PPR’s Fnac music, book and multimedia chain were also strong, increasing 23.8 percent, excluding online sales. Much of the growth was driven by the nine new stores Fnac inaugurated this year, six outside of France. Including Internet sales, PPR said Fnac sales rose by 24.2 percent.
Of the $182.8 million in PPR’s Internet sales, $113.2 million was generated by the retail divisions, most notably Redcats and Fnac. PPR said e-commerce sales were 5.2 times higher in 2000 than in the previous year.
Looking ahead, Weinberg said: “We expect to see 2001 sales growth in the order of 20 percent when our 2000 acquisitions will contribute fully to our top line.”
Analysts said PPR’s prospects for 2001 were good largely because it is diversified across several sectors. “I think growth of 20 percent is conservative,” said Champ at Credit Lyonnais. “PPR looks on track to produce another year of buoyant growth.”

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