PPR Net Profit Jumps, Expects More Gains in 2008
French retailer PPR said on Wednesday 2007 net profit rose 34.6 percent, helped by strong results at its luxury and African trading divisions and its acquisition of German sportswear group Puma.
The owner of fashion house Gucci, Fnac books and electronics stores and La Redoute catalogues said it was confident of further sales and profit growth this year despite a more uncertain economic environment.
"We have set our budgets in the expectation of a more complicated economic environment than in 2007 but without any real rupture," Chief Financial Officer Jean-Francois Palus told reporters when asked about the outlook for luxury goods.
"We are still heading for a rise in our results and profitability," he added. PPR's retail businesses had also started 2008 as they had ended 2007, he said.
PPR said in a statement 2007 net profit was 922 million euros ($1.37 billion), up from 685 million in 2006. Recurring operating profit rose 32.9 percent to 1.696 billion euros.
Palus said operating profit at its luxury Gucci Group division rose 29 percent to 731 million euros, led by a 69 percent rise to 92 million euros in operating profit at Bottega Veneta.
Bottega Veneta's operating margin is now 25.2 percent, a bit behind the Gucci brand on 29.7 percent.
Operating losses at French fashion house Yves Saint Laurent -- which this week opened a remodeled flagship Paris store -- narrowed to 32 million euros from 49 million. Palus said that included the costs linked to the new-look store.
Analysts polled by Reuters Estimates had expected net profit of 840 million euros and operating profit of 1.671 billion euros, according to the median of 18 forecasts.
Net profit forecasts were clouded by uncertainty over the treatment of one-off items such as capital gains and writedowns on businesses the group has sold or earmarked for disposal.
Group net profit from continuing operations rose 50.5 percent to 1.058 billion euros, PPR said. Excluding non-current items, net profit rose 27 percent to 904 million euros.
Palus said the one-offs included a capital gain on the sale of its Kadeos gift vouchers business to Accor, writedowns on goodwill of its Italian furniture business and 28 million euros of restructuring charges at Fnac and Redcats.
PPR said last month it was in talks to sell its YSL Beaute cosmetics unit to L'Oreal for an enterprise value of 1.15 billion euros.
Palus said the aim was to sign the deal once it was reviewed by works councils and European competition regulators. The deal was filed for approval in Brussels on Tuesday, he said.
PPR shares, which have fallen sharply since October on fears about a U.S-led consumer slowdown, closed up 0.7 percent on Wednesday.