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May 2, 2010
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PPR says aims to improve profitability in 2010

By
Reuters
Published
May 2, 2010

Gucci

By Astrid Wendlandt

PARIS, April 28 (Reuters) - French retail and luxury group PPR (PRTP.PA) returned to growth for the first time after five straight quarters of decline, with a 1.3 percent rise in first-quarter comparable sales, driven by a strong rebound at Gucci Group.

Gucci Group, which accounts for the bulk of PPR's valuation, saw comparable sales up 6.1 percent and for the Gucci brand alone sales were up 5.3 percent in the first three months of the year.

PPR, which also includes retailers Fnac, Conforama and Redcats, on Wednesday 28 April posted total sales of 4.13 billion euros, roughly in line with expectations of 4.1 billion euros based on a Reuters poll of 10 analysts.

Gucci Group's sales growth compares with a 10 percent rise in comparable first-quarter sales at LVMH's (LVMH.PA) fashion and leather goods division and Burberry's (BRBY.L) first-half rise of 6 percent in like-for-like sales.

PPR said it expected sales growth to speed up during the year and profitability to improve.

"With all these programs (regarding sales, marketing and cost control) in place, we should deliver a healthy progression in operating and financial performances in 2010," PPR Chairman and Chief Executive Francois-Henri Pinault said in a statement.

Puma (PUMG.DE), of which PPR owns 69.4 percent, on Wednesday 28 April raised its own expectations for the current year after posting forecast-beating first quarter results.

PPR Finance Director Jean-Francois Palus said Gucci Group's wholesale business, which remained flat in the first quarter and represents 34 percent of revenues, would pick up throughout the year.

"We expect wholesale revenues to pick up in the latter part of Q2 with the full impact in the later part of the year," Palus told a conference call with analysts.

Echoing comments from other fashion executives earlier this year, Palus said winter/fall orders for the Gucci brand were up "in double digit terms," backing expectations that sales would increase quarter after quarter.

In the first quarter and on a comparable basis, Bottega Veneta sales were up 11 percent while Yves Saint Laurent revenues were down 0.7 percent with the group saying the French brand was "pursuing a regional balancing of its network."

Among PPR's retail business, Fnac sales rose 1.6 percent on a like-for-like basis, Conforama was up 2.6 percent and Redcats was down 0.5 percent.

PPR shares reached a one-year high of 110.7 euros on April 22 and have been sliding since the beginning of the week, pulled down by the overall market. On Wednesday 28 April, they closed down 1.38 percent at 103.95 euros. (Editing by Elaine Hardcastle; Editing by Louise Heavens)

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