PARIS — Pinault-Printemps-Redoute, the French retailer that controls Italy’s Gucci Group, on Thursday reported an 11 percent decline in 2003 sales, deflated by the sale of assets, soft spending in its core European markets and the depreciating dollar.
This story first appeared in the January 16, 2004 issue of WWD. Subscribe Today.
PPR, which has been honing its profile by scrapping business-to-business activities in favor of luxury and retail, said 2003 sales fell to $30.69 billion, or 24.36 billion euros, from $34.48 billion, or 27.37 billion euros, a year ago. Adverse exchange rates cut $1.25 billion, or 991.5 million euros, off the balance sheet, PPR said.
Sales figures met analysts’ consensus forecasts and PPR stock climbed 1.7 percent to close at $103.82, or 82.40 euros, in trading on the Paris Bourse Thursday.
On a conference call, chief executive Serge Weinberg declined to comment on replacements for Gucci’s creative director Tom Ford and ceo Domenico De Sole. He reiterated that an announcement would follow Ford’s last show on March 8 in Paris for Yves Saint Laurent. “But it won’t be on March 9,” he quipped.
He said discussions with candidates were “continuing” and had been “positive.” Weinberg also debunked market speculation that a strategy change was brewing at Gucci, calling rumors of retrenchment at YSL and a sale of Boucheron, the Paris jeweler, “completely groundless.”
“We have been part of the [growth] process [at Gucci] since day one,” said Weinberg.
Ford and De Sole, after failing to reach common ground with PPR on their contract renewals, last November said they would leave in April.
Though PPR has said repeatedly that successors would not be named until March, Alexander McQueen is tipped to replace Ford at YSL. Meanwhile, Stefano Pilati, the women’s design director at YSL, is said to be a contender for Gucci, where he would work with the current creative team.
As for PPR, Weinberg said he was cautious for 2004 and that he expected little improvement in consumer spending in France and continental Europe.
Weinberg said the “new PPR,” or the group’s retail core, grew 1 percent for the year with sales climbing to $20.73 billion, or 16.46 billion euros, from $20.5 billion, or 16.3 billion euros. PPR also operates the Rexel electronic components firm and the CFAO African trading company.
At the Printemps department store chain, sales dipped 4.3 percent last year. At the flagship on Boulevard Haussmann, which suffered a “collapse” in tourism, sales fell 21 percent.
Growth was more robust at Fnac, PPR’s music and book chain, as sales increased 7.5 percent. Sales at its Conforma furniture retailer grew 1.6 percent, while the Orcanta lingerie chain grew 4.8 percent.
Sales at the Redcats mail-order division declined 5.8 percent. At constant currency exchange rates, however, the unit’s sales grew 0.4 percent.
In the luxury arena, corresponding to the sales from August to October already reported by Gucci, sales in the fourth quarter increased 7.8 percent to $818.8 million, or 694.9 million euros, as the sector experienced a worldwide rebound. For the year, luxury sales inched up 0.7 percent to $3.22 billion, or 2.56 billion euros.
So far this year, Weinberg said retail and luxury sales “were in line with or exceeding fourth-quarter trends.”
In the fourth quarter, sales fell 12.2 percent to $8.45 billion, or 6.71 billion euros, from $9.62 billion, or 7.64 billion euros, a year ago. On a comparable basis, they increased 2.3 percent.