UPDATE: PPR Sales Rise On Strong Luxury Growth, Puma Disappoints
April 25 2012 - 3:14PM
Dow Jones News
French luxury-to-retail company PPR SA (PP.FR) Wednesday said it
expected another good year, after its first-quarter sales beat
expectations, driven by strong demand for luxury goods while the
company's sport and lifestyle division showed more modest
growth.
Chief Executive Francois-Henri Pinault reiterated his previous
guidance saying performance in the first quarter reinforced
"confidence in PPR's ability to deliver another year of brisk
revenue growth, combined with gains in operating and financial
performance, in 2012."
Sales for the first quarter rose 15% to EUR3.26 billion on a
pro-forma basis; that strips out contributions from its Redcats
catalogue business and Fnac retail unit in Italy, which are up for
sale. The figure was above analyst expectations of EUR3.15
billion.
Revenue, which increased 7.9% on a like-for-like basis,
excluding currency variations and acquisitions, was further boosted
by Italian suit maker Brioni, which PPR bought in 2011.
Business in the company's luxury division, home to its star
Gucci brand as well as Bottega Veneta and Balenciaga, showed solid
growth, up 18% on a like-for-like basis, as Gucci sales remained
strong, up 12%.
In the fourth quarter of 2011, a slow-down in all-important
Gucci division's growth to 12% on year in like-for-like terms, from
21% in the previous quarter, had already raised concerns among
investors.
Recent sales updates from other luxury companies, including
France's LVMH Moet Hennessy Louis Vuitton SA (MC.FR, LVMUY) and the
U.K.'s Burberry PLC (BRBY.LN, BURBY), have worried investors, with
figures pointing to a slackening in the pace of the sector's growth
since the beginning of the year.
The company's sport and lifestyle division showed weaker growth
with sales increasing 2.8%, hurt by a weaker performance from Puma
AG Rudolf Dassler Sport (PUM.XE), the company's main sportswear
brand, which posted a 3% rise in sales.
Despite the brand's "disappointing performance," Chief Financial
Officer Jean-Marc Duplaix described recent reports PPR might sell
Puma as "ludicrous".
"We do not have any intention whatsoever to divest from Puma,"
he said.
PPR is in the process of shedding its retail assets in order to
focus its business on luxury and sports-type brands. Along with
Redcats, which the company has already excluded from its financial
releases, PPR hopes to sell the home-electronics chain Fnac, which
comprised about one third of the company's revenue last year.
Over the first quarter, Fnac reported a 0.8% drop in
like-for-like sales as the euro-zone crisis continued to take its
toll on consumer spending.
Over the past six months, PPR shares have outpaced France's
CAC-40, rising close to 8%, while the benchmark index has risen
around 2%.
PPR shares closed at EUR119.7 Wednesday.
-By Nadya Masidlover, Dow Jones Newswires; +33 1 4017 1754;
nadya.masidlover@dowjones.com
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