Bloomberg News

PPR Gains Most in 18 Months After Revenue Exceeds Estimates

October 27, 2011

(Updates with closing share price in second paragraph.)

Oct. 27 (Bloomberg) -- PPR SA, the owner of the Gucci brand, advanced the most in about 18 months in Paris trading after third-quarter sales beat analysts’ estimates and the company said it sees no sign of a slowdown in demand for luxury goods.

The shares rose 5.4 percent to 116.5 euros, the steepest gain since May 10, 2010.

Revenue from continuing operations climbed 8 percent to 3.86 billion euros ($5.5 billion), Paris-based PPR said after markets closed yesterday, exceeding the 3.79 billion-euro average of four estimates. Luxury-goods sales rose 25 percent, excluding acquisitions, disposals and currency shifts, offsetting declines at online retailer Redcats and the Fnac electronics chain.

“The industry-beating luxury performance is likely to drive earnings upgrade at Gucci and Bottega Veneta,” Thomas Chauvet, an analyst at Citigroup Inc., wrote in a note. He has a “buy” recommendation on the shares.

PPR joins rivals LVMH Moet Hennessy Louis Vuitton SA and Burberry Group Plc in beating estimates for quarterly sales. LVMH said this month it’s confident for the rest of 2011, while Burberry said it hasn’t seen any slowdown in demand.

“Over the full year, PPR has the ability to deliver sustained revenue growth and achieve higher financial performances than in 2010,” Chief Executive Officer Francois- Henri Pinault said in a statement.

Luxury Growth

Third-quarter revenue rose 21 percent at Gucci, 39 percent at Bottega Veneta, 35 percent at Yves Saint Laurent and 22 percent at PPR’s other luxury brands on a comparable basis.

Revenue fell 5.6 percent on the same basis at Redcats and 4.2 percent at the Fnac electronics and media chain, which PPR attributed to “economic headwinds.”

PPR is speaking with “a few potential investors” that are interested in acquiring Redcats, Chief Financial Officer Jean- Francois Palus said on a conference call with analysts. The company suspended a formal process to sell the division last month because of the financial crisis.

--Editors: Thomas Mulier, Sara Marley

To contact the reporter on this story: Paul Jarvis in London at pjarvis@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net


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