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PPR Sales Rise On Strong Luxury Growth, Puma Disappoints

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04/25/2012 | 08:59pm CEST

--PPR sales rise to EUR3.26 billion in the first quarter, lifted by strong growth in luxury

--Gucci on-year growth in the first three months of 2012 remained stable from the fourth quarter of 2011

--PPR says it has no plans to sell its sports brand Puma

(Adds company comments)

   By Nadya Masidlover 

French luxury-to-retail company PPR SA (>> PPR) 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 (>> Puma AG Rudolf Dassler Sport), 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; [email protected]

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Stocks mentioned in the article : PPR, Puma AG Rudolf Dassler Sport
Stocks mentioned in the article
ChangeLast1st jan.
KERING 0.21% 481.1 Real-time Quote.22.49%
PUMA AG RUDOLF DASSLER SPORT 1.24% 489.5 Delayed Quote.33.20%
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Financials (€)
Sales 2018 13 270 M
EBIT 2018 3 603 M
Net income 2018 2 506 M
Debt 2018 2 010 M
Yield 2018 1,52%
P/E ratio 2018 23,84
P/E ratio 2019 21,15
EV / Sales 2018 4,73x
EV / Sales 2019 4,24x
Capitalization 60 791 M
Duration : Period :
Kering Technical Analysis Chart | KER | FR0000121485 | 4-Traders
Technical analysis trends KERING
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 24
Average target price 512 €
Spread / Average Target 6,6%
EPS Revisions
François-Henri Pinault Chairman & Chief Executive Officer
Jean-Philippe Bailly Chief Operating Officer
Jean-Marc Duplaix Group Chief Financial Officer
Baudouin Prot Director
Patricia Barbizet-Dussart Vice Chairman
Sector and Competitors
1st jan.Capitalization (M$)
KERING22.49%70 688
ROSS STORES5.86%31 987
ZALANDO5.23%13 221
GAP-2.88%12 604