PPR SALES SURGE 24.1% BEHIND LUXURY, INTERNET
Byline: Robert Murphy
PARIS — Strong consumer spending helped retail conglomerate Pinault-Printemps-Redoute rack up a 24.1 percent sales gain in the first nine months of the year.
Propelled by growth in all of its divisions, including double-digit and triple-digit gains in its luxury and Internet properties, respectively, PPR said Tuesday that its sales through Sept. 30 tallied $14.18 billion.
PPR did not provide separate figures for the quarter. However, the difference between sales published for the six and nine months was $4.8 billion. First-half sales were $9.4 billion, up 25 percent.
Dollar figures are converted from the euro at current exchange rates.
“The momentum enjoyed in the first half of the year continued in the third quarter, with all divisions achieving sustained organic growth, especially in international markets,” the group, controlled by French tycoon Francois Pinault, said in a statement.
Exclusive of new businesses and currency fluctuations, sales through September grew 7.8 percent, according to PPR, with luxury goods sales, a reflection of PPR’s 42 percent stake in Gucci Group, up 14.7 percent. Retail sales were up 8.2 percent, business-to-business sales up 5 percent and credit and financial services revenue up 9.3 percent.
Analysts said the results were in line with their expectations, adding that they were particularly pleased with PPR’s strong retail performance. PPR stock closed Tuesday at $167.49, up 0.9 percent, on the Paris bourse.
“The strong retail performance basically sends a good message that there is no visible slowdown in consumption on the immediate horizon, especially in France and Europe,” said Alain du Brusle, analyst at UBS Warburg in Paris.
Leading the growth in its retail division were PPR’s Fnac music, book and multimedia chain and its Conforama furniture division.
Thanks to a 54 percent surge in personal computer sales, Fnac’s nine-month sales jumped 30 percent.
Without providing figures, PPR said its American-based mail-order business, Brylane, and sales at the international division of cataloger Redoute recovered momentum in the quarter. Including e-commerce, overall retail sales jumped 13.3 percent.
Revenues were also bolstered by a pronounced increase in revenues from online activities. PPR said sales from its Internet division for the first nine months totaled $96.6 million, up 176.8 percent when compared with the same period last year. The Redcats mail-order business turned in particularly impressive e-commerce results with a surge of 633 percent. Overall, e-commerce revenue accounted for 0.7 percent of PPR’s total sales through September, compared with 0.3 percent in the year-earlier period.
“PPR’s Internet strategy is sound,” said Christian Devismes, an analyst at Natexis Capital here, adding that most of the group’s e-investments, excluding its Fnac online store, should start turning a profit within the next year.
“Fnac is similar in structure to Amazon.com,” said Warburg’s du Brusle. “I expect it won’t break even before at least 2003.”
Meanwhile, sales at PPR’s luxury goods division came as no surprise, since they reflected revenue already reported by Gucci for the fourth quarter of 1999 and the first half of this year. PPR’s luxury sales for the nine-month period were $1.25 billion.
PPR trumpeted the strength in the sector.
“Gucci sales expanded significantly in all markets, testifying to the outstanding appeal of the product offering, the positive impact of the store modernization program and the global success of the Gucci brand,” the company said Gucci sales include the Yves Saint Laurent ready-to-wear business and Italy’s Sergio Rossi shoe firm, which together tacked on $400.6 million to Gucci sales for the nine-month period.
They do not include sales at Boucheron, the French luxury jewelry firm Gucci acquired in May. Boucheron will be consolidated into Gucci accounts as of July 1, 2000.