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Gucci Group Sales Gain 5 Percent In First Quarter

Godfrey Deeny
April 22nd, 2009 @ 00:50 AM - Paris

Turnover in Gucci Group, the world’s third largest luxury conglomerate, advanced 5 percent in the first quarter of 2009, though most of its fashion brands suffered declines in revenue.

Gucci Group scored sales of 854.8 million euros, or $1.106 billion at current exchange rates, a rise of 5 percent compared to the like period last year, though a comparable fall of 3.4 percent if currency fluctuations are factored in.

The group’s parent holding PPR, which includes such companies as sports label Puma, electronic, DVD and books retailer Fnac and furniture retailer Conforama, saw sales fall 4.5 percent to 4.777 billion euros, or $6.181 billion in the opening three months.

Despite the less than stellar figures, PPR’s CEO François-Henri Pinault still said Tuesday night at a presentation to analysts and media that the “group’s sales performance in the early months of the year underscores PPR’s capacity to withstand the deterioration and volatility of its operating environment.”

The market apparently did not see things the same way; selling PPR down 8.12 percent in heavy trading to 54.70 euros, or $86.11 on the Paris Bourse Wednesday.

The Gucci brand itself scored a 10.6 percent increase in sales in the opening quarter, totaling 567 million euros, or $733.7 million.

Calling the market “more challenging,” PPR said in a release that the Gucci brand “had mixed performances,” in mature markets, with sales in Western Europe softening by 1.5 percent. Sales in China, where Gucci has 25 stores in its worldwide chain of 264 units, soared 15 percent.

“It’s an extremely volatile environment,” PPR’s finance director,” Jean-François Palus told the audience Tuesday.

And, in a sign of the pressures PPR is beginning to face, Pinault, whose family are the controlling shareholders in the group, was blocked in a taxi last month as he exited a board meeting, held up by some 50 angry workers protesting the group’s plan to suppress 1,800 jobs in his distribution firms. Local police eventually freed the executive after one hour.

Business in Gucci Group’s star-performing label Bottega Veneta endured a 2.3 percent fall in sales to 103.7 million euros, or $134.2 million. “First quarter activity in mature markets was impacted by a significant drop in Japan (down 28 percent), a country that represents 30 percent of Bottega Veneta sales,” PPR conceded.

Yves Saint Laurent was hit by a 5.4 percent slump in sales to 59.7 million euros, or $77.3 million, as revenues from leather goods, fashion and licensing all tumbled.

Worst of all, turnover in Gucci Group’s Other Brands division – which includes high-profile fashion houses like Alexander McQueen, Balenciaga and Stella McCartney - slumped 5.8 percent in the first three months, diving to 124.3 million euros, or $160.8 million. However, the owners did not break out sales by each company.

Puma enjoyed a 3.6 percent gain in sales to 697.4 million euros, or $902.4 million, buoyed by its performance in the Americas, where turnover surged by 11.2 percent, fueled by good performances in US footwear.

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