PARIS — Pinault-Printemps-Redoute, the French retailer that controls Gucci Group, on Tuesday reported an 8.6 percent drop in first-quarter sales, but bested market forecasts with strong core growth.
PPR said sales fell to $6.91 billion, or 5.76 billion euros, from $7.56 billion, or 6.3 billion euros, a year ago. But factoring out divestments and currency exchange effects, sales gained 5.5 percent, PPR said.
The revenues beat analysts’ consensus estimates by about 1 percent and PPR stock rose 3.15 percent to close at $104.16, or 86.80 euros, in trading Tuesday on the Paris Bourse. Dollar figures have been converted from the euro at current exchange.
Chief executive Serge Weinberg, on a conference call with analysts and reporters, called the quarter “excellent,” driven by good performances in PPR’s key French market as well as brisk growth abroad.
He also touted strong sales at Gucci, which rose 3.8 percent, corresponding to numbers already reported by the for the November to January period.
PPR is in the midst of a $2.5 billion tender offer to acquire the 32 percent of Gucci it doesn’t already own. Weinberg declined to comment on the status of the put, which expires April 29.
In accordance with Dutch law, where Gucci is incorporated, the Italian luxury firm today will convene an exceptional shareholders’ meeting in Amsterdam to discuss the offer.
Some have speculated that PPR will use the meeting as a forum to divulge its chosen successor to Domenico De Sole, Gucci’s outgoing ceo. Weinberg declined to comment on that eventuality, only saying De Sole’s replacement will be announced before the end of the month.
“In a few days from now, the group will be in full order to move forward,” he said.
PPR already has named replacements for Gucci’s departing creative director, Tom Ford. It appointed Stefano Pilati to head Yves Saint Laurent, and split design duties at Gucci between Alessandra Facchinetti, Frida Gianni and John Ray.
Over the last year, PPR has been preparing for its foray into luxury by selling off its traditional business-to-business activities to concentrate on luxury and retail. These sales affected first-quarter revenues to the tune of $871.8 million, or 726.5 million euros, PPR said. Unfavorable exchange rates shaved off another $209.4 million, or 174.5 million euros.
Weinberg said sales at the so-called “new PPR,” or its core retail and luxury activities, grew 5.5 percent in the quarter to $4.99 billion, or 4.16 billion euros. Retail sales in France improved 4.3 percent after several sluggish quarters.
Spurred by strong sales in January, which cooled in February and March, sales at the Printemps department stores grew 2.3 percent in the quarter. The chain’s main Boulevard Haussmann unit in Paris experienced a 1.4 percent gain. Weinberg attributed this to a resurgent tourist business as well as the store’s revamped beauty and designer clothing departments.
Bolstered by improving sales at its Brylane division in the United States, the Redcats mail-order business performed better than analysts’ expectations. Sales declined 0.6 percent to $1.28 billion, or 1.07 billion euros. But they rose 2.5 percent excluding the effects of currency exchange.
The Fnac disc, book, multimedia and electronics chain had an 11 percent sales gain to $1.11 billion, or 925 million euros, and the Conforama furniture retailer saw a 4.9 percent sales gain to $862.8 million, or 719 million euros.
The CFAO African trading firm grew 10.8 percent to $547.2 million, or 456 million euros, with the Rexel electronic components business, which PPR expects to sell before the end of 2004, saw sales fall 3.8 percent to $1.9 billion, or 1.59 billion euros.