GUCCI REFINANCES, SETS $940M REVOLVING CREDIT AGREEMENT
NEW YORK — Refinancing after a series of acquisitions, Gucci Group NV announced Friday that it signed a $940 million revolving credit facility.
Dollar figures are based on the current exchange rate of the euro.
The facility, arranged by Citibank-Schroder Salomon Smith Barney and Unicredito Italiano SPA, was syndicated among 29 institutional banks. The worldwide luxury goods producer said it will use the facility to refinance existing debt and a multi-currency facility, as well as for general corporate purposes.
News of the refinancing last week is a sign that Pinault-Printemps-Redoute, Gucci’s principal shareholder, may be positioning the company for further acquisitions. Gucci’s shares on the New York Stock Exchange Friday closed at $98.94, down about a point.
Gucci’s net income dropped to $46.6 million in the period ending April 30, due chiefly to costs linked to the $1 billion purchase of Yves Saint Laurent and its parent Sanofi Beaute last November. Since then it has canceled nearly all of YSL’s licenses and has begun creating a updated line of boutiques.
Other acquisitions include Sergio Rossi during the 1999 fourth quarter and the French jeweler Boucheron last May.
When Gucci reported its first-quarter results, the net income drop was attributed largely to costs linked to Yves Saint Laurent and Sergio Rossi purchases.
Fully consolidated group net revenues in the quarter reached $530.7 million. Sales were $270 million in the year-ago period. The company began consolidating figures from the YSL and Sergio Rossi acquisitions in the fourth quarter of 1999.
The Gucci division contributed $342.9 million in sales in the first quarter — a 27 percent rise over the corresponding period last year, while the YSL Couture, YSL Beaute and Sergio Rossi divisions generated $187.8 million.
Gucci chairman and chief executive Domenico De Sole has said retail sales during May and June were strong, with gains exceeding 30 percent, reflecting the ongoing strength in the luxury sector.
In the first quarter, retail sales from Gucci’s directly operated stores rose 31.5 percent to $223.7 million.
De Sole also said that Gucci’s efforts to “refurbish stores, focus on the local customer base, and train our staff are paying off. What we are talking about here is real growth in retail, not growth from currency gains.”
Retail sales from directly operated stores continue to generate the lion’s share of Gucci sales. Wholesale distribution, which includes franchises, duty-free boutiques, department and specialty stores, rose 37 percent.