Wednesday, April 27, 2011
First-quarter 2011 revenue
• Revenue up 9%, led by Luxury (up 26%) and Sport & Lifestyle (up 13%)
• All geographic areas reported growth gains (excluding Japan)
In the first quarter of 2011, PPR posted €3.7 billion in revenue, up 9.1% on a reported basis and 6.5% on a comparable basis versus first-quarter 2010. This excellent start to the year was powered by the fast-paced growth of the Group’s businesses in emerging countries, which represented 21% of revenue.
The Luxury Group turned in a stellar performance, with revenue surging 26.2% on a reported basis. Overall, sales for the Luxury and Sport & Lifestyle businesses climbed 20.6% on a reported basis and 14.7% on a comparable basis.
PPR enjoyed revenue growth in all geographic areas with the exception of Japan, where the March 11 earthquake brought an end to the upward trend observed since the beginning of the year.
François-Henri Pinault, Chairman and CEO, noted: “PPR delivered further performance gains in first-quarter 2011. Strong sales growth was driven by an excellent showing from our Luxury and Sport & Lifestyle businesses, which altogether delivered double-digit growth in all geographic areas apart from Japan. In Japan, the professionalism and courage of our teams have seen the Group’s brands through testing times. These performances testify to our vigorous organic growth dynamic. I am therefore confident that in 2011 PPR will be able to maintain its revenue growth momentum and surpass its 2010 financial performance, building on the strength of its business model and the pertinence of its strategy.”
Gucci had an excellent start to the year, with revenue jumping 24% on a reported basis and 20% on a comparable basis versus first-quarter 2010. Sales advances were recorded in both directly-operated stores (up 21%) and with third-party distributors (up 18%). Timepieces and ready-to-wear were highly successful, thanks chiefly to the much-applauded Cruise and Spring-Summer 2011 collections. All geographic areas except Japan benefited from the strong momentum, posting double-digit growth in sales, led by star performers North America (up 35%) and Asia-Pacific (up 26%). Revenue growth was reported in all product categories, and particularly Leather Goods (up 17%).
To celebrate Gucci’s 90th anniversary in 2011, the brand’s unique heritage is showcased in the “Forever Now” corporate advertising campaign and in a special “1921” collection. The innovative recent launch of the Gucci Kids collection has been a huge success and has helped attract new clientele segments into Gucci stores.
At end-March 2011, Gucci had a network of 327 stores, including 40 in mainland China (i.e., excluding Hong Kong and Macao).
Revenue for first-quarter 2011 surged 38% on a reported basis and 32% on a comparable basis. Except for Japan where sales dropped 3% over the quarter, all geographic areas delivered double-digit revenue growth, led by Western Europe (up 52%) and Asia-Pacific (up 51%). These regions account for 63% of Bottega Veneta’s total sales. Sales in directly-operated stores and to third-party distributors climbed sharply over the quarter, up 28% and 45%, respectively. The main product categories continued on an upward trend, buoyed by Leather Goods (up 33%) and in particular the brand’s latest iconic launches.
At end-March 2011, Bottega Veneta had a network of 151 stores.
Yves Saint Laurent
Yves Saint Laurent reported strong sales growth in first-quarter 2011 compared to the same year-ago period, up 29% on a reported basis and 27% on a comparable basis. Sales to distributors made very strong advances (up 41%), while sales in directly-operated stores surged 25%. Business was buoyant in both North America (up 40%) and Western Europe (up 34%), which together represented 65% of Yves Saint Laurent’s first-quarter sales.
All product categories reported double-digit growth in sales over the period: revenue for ready-to-wear was up 30%, thanks to well-received men’s collections, while sales of shoes surged 40%, powered by the continuing success of the Tribute and TribToo models.
At end-March 2011, Yves Saint Laurent had a network of 78 stores.
Other Luxury Brands
First-quarter sales from Other Luxury Brands were up 24% on a reported basis and 21% on a comparable basis versus first-quarter 2010.
Balenciaga enjoyed vigorous double-digit sales growth across all geographic areas. Double-digit growth at Boucheron was spurred by a buoyant performance from High Jewellery and Jewellery. Sergio Rossi reported upbeat sales in its network of directly-operated stores. Alexander McQueen posted double-digit growth with brisk sales in all product categories, while Stella McCartney once again delivered robust growth across all regions.
At end-March 2011, the network operated by the Group’s Other Luxury Brands comprised 142 directly-operated stores.
Puma sales for the first quarter of 2011 moved up 13% on a reported basis and more than 5% on a comparable basis compared to first-quarter 2010. Sales advanced 7% in directly-operated stores and 5% with third-party distributors. All product categories contributed to the growth momentum, including Footwear (up 7%), Apparel (up 2%) and Accessories (up 8%). Business in EMEA and Asia-Pacific was driven by Footwear and Apparel, while in North America Apparel led the way. In Latin America, Puma posted double-digit growth in its main markets. In Japan, which represents 10% of Puma’s business, sales edged up 3% in first-quarter 2011.
In first-quarter 2011, Fnac saw sales retreat 3% on a comparable basis and 2% on a reported basis versus the same period in 2010.
Revenue fell 4% in France over the first quarter, despite a sharp 13% rise in online sales and the success encountered by services. Sales of technical products retreated 2% while editorial products declined 7%, reflecting the absence of major new product launches during the quarter.
Fnac’s international business delivered a patchy performance, with comparable first-quarter sales down 2%. Amid a dismal economic environment, Fnac sales declined in Portugal and Spain, even though the brand continued to expand its market share in these countries. Italy bucked the trend by posting a positive revenue performance for the period.
In all, 10% of Fnac’s total sales were generated online. Two new stores were opened at the end of March 2011, with five more stores set to open later this year, including three based in the outskirts of cities. Fnac is primed to reinvigorate its sales performance over the coming months.
Redcats delivered its third consecutive quarter of growth, with revenue up 1% on a reported basis and almost 2% on a comparable basis, buoyed by an enhanced product offering (variety, price, guest brands). Online sales continued to grow, and now account for 58% of Redcats’s total revenue, a rise of 12%. Special operations and frequent innovations on the internet (launch of new websites, applications for smartphones and tablets, partnerships, Facebook boutique, virtual models) have proved very successful. In a fiercely competitive environment, La Redoute generated 78% of its French sales on line. Revenue for the international business, where online sales represented 61% of total sales, was up slightly thanks to Russia. Vertbaudet seems to have confirmed its recovery. In the US, the Sport & Outdoor business, which makes 72% of its sales online, reported sales growth of 8% in the first quarter. Large Size home-shopping sales also crept up 2%.
Significant events since January 1, 2011
- On January 14, 2011, PPR signed a €2.5 billion syndicated credit facility maturing in January 2016. This facility – which was taken out as part of the Group’s liquidity management strategy – was significantly oversubscribed.
- On March 18, 2011, PPR announced that it had finalised the sale of Conforama, transferring its shares in Conforama to Steinhoff International and collecting the full payment for the transaction under the terms announced on December 9, 2010.
- In April 2011, PPR successfully completed the partial redemption of its €800 million 8.625% bond issue expiring on April 3, 2014. The early redemption for a total of €250 million was designed to improve the cost and profile of the Group’s debt.
- Since January 1, 2011, PPR has purchased 819,555 treasury shares.
PPR will hold a conference call for analysts and investors at 6:00pm (Continental Europe); 5:00pm (UK); 12:00pm (East Coast, USA), on Wednesday, April 27, 2011.
Conference call dial-in:
From France+33 (0) 1 70 99 42 78
From the UK+44 (0) 20 7138 0825
From the US+1 212 444 0481
Access code: 4490896
From France+33 (0) 1 74 20 28 00
From the UK+44 (0) 20 7111 1244
From the US+1 347 366 9565
Access code for the replay: 4490896# (available until May 11, 2011)
The slides (PDF format) will be available ahead of the conference call at www.ppr.com