Paris—PPR, the luxury conglomerate that owns Gucci, Bottega Veneta and Yves Saint Laurent, today reported that its third quarter sales were up 6.6% to 2.56 billion euros (about $3.32 billion). Its Luxury Division, which includes Gucci and 10 other luxury brands, posted a 12% gain on comparable basis and 24% increase in reported terms “in a mixed economic environment and against a high basis of comparison.”
The results appeared to counter those from other luxury companies that predicted a slowdown in sales as affluent consumer pull back spending, even with reports that Chinese consumers are buying less.
François-Henri Pinault, PPR’s chairman/ceo, sought to reassure, saying, “The Luxury division continues to report outstanding growth propelled by the momentum of our brands across all of the Group’s regions. We are also pursuing the Group’s strategic transformation. This quarter’s impressive performance bears witness to the complementary nature and growth potential of our brands, the strength of the Group and the balanced footprint of our businesses. This reinforces our confidence in PPR’s ability to deliver sustained revenue growth, along with gains in operating and financial performance, over the full year.”
All product categories contributed to the Luxury division’s sales growth, with Fashion and Leathergoods up a strong 11%.
But other analysts weren’t so sure. While Gucci, the company’s largest and flagship brand, reported a 7% increase in sales on a comparable basis and a 16% increase on a reported basis, its performance marked a deceleration from sales growth of 10% in the second quarter and 12% in the first. Moreover, the deceleration is in line with what other major luxury brands, such as Louis Vuitton and Burberry, had seen in major markets such as Asia. PPR also didn’t give a full year forecast other than Pinault’s rather general one.
Gucci reported that all geographic regions reported growth. In Western Europe, sales were up 14%, with a positive impact of tourism on retail sales. Revenue in North America also reported an 11% increase atop a high basis of comparison in the third quarter of 2011, spurred by the brand’s appeal with local clienteles and a growing contribution of tourism. Sales in Asia-Pacific were up 2%, with “good results in Mainland China, where the Group posted strong revenue growth.”
Meanwhile all product categories had growth, particularly leathergoods (up 8%)“which is reaping the benefits of its strategic high-end repositioning implemented over the past several seasons.” Sales of men’s ready-to-wear and children’s collection also posted double-digit growth.
At Bottega Veneta, where the quarter was up against a high basis of comparison, revenue increased 21% on a comparable basis and 31% in reported terms.
The brand achieved a bumper performance on a comparable basis across all geographic areas, especially Western Europe with 42% growth, as tourism complemented strong local demand. Sales also advanced 12% in North America and 18% in Asia-Pacific. In the quarter, revenue jumped by more than 25% in Mainland China.
Bottega Veneta posted “promising growth” in its men’s product lines this quarter (up 32%), particularly footwear, fragrance and other smaller lines such as jewelry.
Hedi Slimane Gets ‘Favorable Response’ from Retailers
Yves Saint Laurent reported excellent year-on-year growth of 27% in comparable terms and 33% on a reported basis.
All areas contributed to this growth, with outstanding performances in Japan (up 58%) and Asia-Pacific (up 64%) on a comparable basis. The other regions also posted very satisfactory performances, against a high basis of comparison, with revenue growth of 22% in Western Europe and 11% in North America.
All product categories made strong contributions, including 30% growth for Fashion and Leathergoods.
The first collections designed by Hedi Slimane “met with a very favorable response from buyers and the media,” the company said.
Other Luxury brands
PPR’s “Other Luxury brands” posted comparable sales growth of 16% (46% in reported terms), with all brands and regions contributing to the performance.
Momentum remained especially strong for Fashion and Leathergoods, which achieved growth of more than 13% in the quarter, “driven by outstanding success of the designer brands and the very solid performances of Brioni and Sergio Rossi.”
Watches and jewelry also reported strong growth, up 26%. “Boucheron’s latest high jewelry collections met with great success and Girard Perregaux continues to gain ground, focusing on the brand’s key values and potential,” the company said.
Sports & Lifestyle Division: ‘Mixed Results’
Results were mixed in the Sport & Lifestyle division, which a 1% decrease in comparable revenue and a 5% rise in reported revenue. Puma sales were stable overall on a comparable basis while Volcom’s revenue contracted due to delivery delays.
Puma sales were strongest in accessories, especially Cobra Puma Golf, and a resilient performance from the apparel category. Footwear sales remained sluggish due to the tough economic climate in Western Europe, which accounts for a significant share of the brand’s activities.
Puma once again reported good sales performances in North America (up 9%) and in its six priority emerging markets, including Russia, India, Brazil and Mexico. Business remained mixed in Western Europe, with revenue down in France and the United Kingdom.
During the quarter, PPR and YOOX SpA announced a joint-venture agreement, creating a company, 51%-owned by PPR and 49% by YOOX Group, which will be entirely dedicated to managing mono-brand online stores in collaboration with several PPR luxury brands, such as Yves Saint Laurent, Alexander McQueen, Balenciaga, Bottega Veneta and Sergio Rossi.
Earlier this month, PPR decided to spin off its Fnac, its French based music and electronics retailer, a transaction that should be completed in 2013.
PPR said Fnac gained market share in most of its territories during the third quarter of 2012, despite the “economic headwinds.” Nevertheless, revenue edged down 2.3% on a comparable basis. In France, where Fnac generates nearly 70% of its revenue, the brand is proving more resilient than competitors, with a comparable drop in sales of just 1.5%.