PPR SALES SOAR 25 PERCENT IN FIRST HALF
Byline: Robert Murphy
PARIS — In the latest indication that the French retail sector is in a strong growth cycle, Pinault-Printemps-Redoute said Tuesday its first-half sales for 2000 jumped 25 percent to $10.5 billion.
The distribution conglomerate, controlled by French tycoon chairman Francois Pinault, was fueled over the period by rising e-commerce sales, the bullish global economy and the performance of its recently acquired companies, chief executive Serge Weinberg told WWD.
Excluding the effect of exchange rates and acquisitions, PPR’s sales edged up 8.1 percent, compared with 4 percent growth during the same period last year. The firm will disclose earnings Sept.14. All dollar figures are converted from the euro at current exchange.
“All of the group’s activities performed dynamically in the first half, reflecting the success of our combined strategy to organically grow the firm as well as actively engaging in strategic acquisition,” said Weinberg.
He added PPR was confident the firm’s sales growth would continue into the second half. “At this point, the economy looks good and our strategy is sound,” he said.
PPR’s first-half results underscore the continued performance of the retail sector here. Two weeks ago LVMH Moet Hennessy Louis Vuitton, the luxury group controlled by Pinault’s main business rival, Bernard Arnault, reported its first-half sales leaped a record 40 percent to $4.8 billion. All dollar figures are converted from the franc at current exchange.
PPR sales were up across all of its divisions, including sales at Gucci Group, in which PPR holds a 42 percent stake. Gucci’s sales of $783 million, up 15 percent, include the Yves Saint Laurent fashion business and the Sergio Rossi shoe business. They correspond to sales Gucci has already reported for the period spanning November 1999 to April 2000. They do not include sales at Boucheron, the French luxury jewelry firm Gucci acquired in May.
PPR’s robust numbers arrive at a time when Pinault’s business practices are under scrutiny in the French press. Recently, the Paris daily Liberation published an article questioning the manner in which Pinault acquired a West African distribution operation. Weinberg refuted the accusations in a subsequent letter to the editor.
Pinault’s offices were recently raided in connection with an ongoing investigation into whether he committed fraud by inflating the financial statement of furniture retailer Dapta Mallinjoud before he sold it in 1992. And in January, Pinault was named in a lawsuit linked to the rehabilitation of Executive Life Insurance in California. Weinberg suggested that the legal questions have been stirred up by Arnault. who he said still harbors ill will because in a white-knight maneuver Pinault stymied his attempt to take control of Gucci, diluting Arnault’s stake from 34.4 percent to his current 20.6 percent.
“We all know the origins of the attacks against Pinault,” said Weinberg. When asked if they were related to Gucci, he replied: “That’s one of the hypotheses circulating.” Weinberg insisted that the ongoing investigations have no effect on business. “They are most likely related to other business concerns,” he said.
PPR’s stock finished down 2.3 percent on the Paris bourse to end trading Tuesday at $210.13.
Meanwhile, PPR said sales in its retail segment increased 13 percent to $4.5 billion. The Printemps department stores had a 4.6 percent increase in sales to $354 million. Sales at the Printemps Paris flagship unit grew most significantly among the chain’s 30 stores. They rose 8.1 percent, thanks to 20 percent increases in both the store’s men’s and designer accessories business.
Elsewhere within Printemps, sales gains were in the low single digits, PPR said, “partly a result of the disruption caused by the closure of one sales floor at the Place d’Italie store in Paris.”
Early this year, the store closed the floor due to slagging sales. Weinberg said shuttering the floor resulted in the loss of two percentage points from the company’s overall first-half sales. In October, however, PPR will have converted the space into a new FNAC address.
The Redcats catalog division, excluding Internet activities, posted first-half sales of $2 billion, an increase of 8.8 percent.
PPR cited an 11 percent rise among its foreign subsidiaries as helping its Redoute catalog sales rise 1.9 percent. “In France, mail-order sales stabilized after declining in the first quarter as a result of mail strikes,” the company explained in a statement. Largely fueling the growth in the catalog division was the American-based Brylane mail-order business, which climbed 11.1 percent, excluding Internet. Including Internet sales, Brylane, which was acquired by PPR two years ago, increased 13.9 percent.
The Chadwick apparel catalog in the U.S. posted a 13 percent gain. Last October, Chadwick opened an e-commerce site, which PPR said generated 10 percent of its first-half sales.
Weinberg said PPR will continue to develop its catalog business in the U.S., both by organically growing its Brylane business and through acquisitions. “The American market is huge, and currently the catalog business there is fragmented,” said Weinberg. “With Brylane, we hope to build a stable platform for expansion in the U.S.”
Overall, Internet sales on PPR’s 60 e-commerce sites generated $62 million in sales, four times the year-ago level.