PPR Reports Significant 2012 Sales, Profit Increase

In Industry News, What's New by Jeff Prine

Spring/summer at Bottega Veneta, one of PPR's strongest performing brands in 2012.

Spring/summer at Bottega Veneta, one of PPR’s strongest performing brands in 2012.

Paris–PPR SA, the owner of Gucci, Yves Saint Laurent, Puma and other luxurygoods brands, reported Thursday strong growth in its 2012 sales and net income and predicted 2013 would see “significantly improving our operating and financial performance.”

For 2012, PPR said net revenue rose 20.8% to 9.73 billion euros and recurring operating income rose 19.3% to 1.79 billion euros.

“The significant growth potential of our brands is driven by their strength, the outstanding quality of their products and the rigorous development of their distribution channels. This potential was once again demonstrated in our Luxury Division in 2012 and we are striving to achieve the same dynamic in the Sport & Lifestyle Division.,” François-Henri Pinault, chairman/ce0, said. “Our strong performance also highlights the good geographic balance of our activities and the consistency of the Group’s strategy. In 2012, we completed further important steps in our transformation into a more international, dynamic and profitable group. We are confident that the strengthening of our assets and the determination of our teams will allow us to continue significantly improving our operating and financial performances in 2013.”

Strong sales in its Luxury Division (which posted a 15% increase) along with its sales of Redcats, its catalog and online retailer, and Fnac, a media superstore helped bolster PPR’s results and countered the less impressive results from its Sport & Lifestyle Division.

The Sports & Lifestyle division, which contains brands such as Puma and Volcom, only had a 3.3% sales rise. During the results Puma backed off its target of 4 billion euros in sales by 2014 and made improving profit its priority.

“Our priority, of course, in sport and lifestyle is still the recovery of Puma, whose recent performance neither met our expectations nor lived up to its potential,” said Pinault. “Once Puma is back on track for growth, we will seek to strengthen in particular the outdoor segment to build a portfolio.”

In its fourth quarter results, PPR said revenue rose 18% on a reported basis, or 12% excluding acquisitions and foreign currency fluctuations, buoyed by demand for Bottega Veneta handbags.

Luxurygoods sales climbed 14% in the fourth quarter on a comparable basis. Sales advanced 8.2% at Gucci, 33% at Bottega Veneta, 13% at Yves Saint Laurent and 20% at other brands including Stella McCartney.

Sales in Asia, excluding Japan, accounted for a quarter of PPR’s total–a slight increase over 2011.

“The beat was driven by the luxury division, which sustained strong sales momentum,” in particular at the Bottega Veneta brand, said Melanie Flouquet, analyst at JPMorgan Chase & Co.

“Gucci is not very impressive,” added Thomas Mesmin, an analyst at Credit Agricole Cheuvreux.