Sign of growth in Paris luxury market despite global economic slowdown
According to the market experts, PPR SA (PP) may rise in Paris trading after saying it’s confident of revenue and profit growth in 2012 and reporting a 16 percent gain in third-quarter sales, led by demand for luxury goods such as Gucci bags and Bottega Veneta wallets. Revenue from continuing operations rose to 2.56 billion euros ($3.3 billion) from 2.2 billion euros a year earlier, Paris-based PPR said after markets closed yesterday. The average of six analysts’ estimates surveyed by Bloomberg was 2.57 billion euros. Growth was 6.6 percent excluding currency shifts as a 12 percent increase at the luxury unit outweighed a 1.2 percent decline at the sports and lifestyle division.
According to Thomas Mesmin, an analyst at CA Cheuvreux in Paris, a 7 percent advance in comparable sales at Gucci, PPR’s largest brand by revenue, “was pretty reassuring.” He also said that, “Also, it’s quite reassuring for” the fourth quarter, when the label plans to open more stores. The analyst, who has an outperform rating on PPR shares, expects the market to react positively to PPR’s quarterly performance.
Luxury-goods companies are fighting for sales as some consumers rein in spending while others continue to splash out. British handbag maker Mulberry Group Plc (MUL) forecast an unexpected drop in full-year profit this week, while Burberry Group Plc (BRBY) said Sept. 11 that profit would be at the lower end of a range of estimates. Hermes International (RMS) SCA said last month it hadn’t yet been affected by the weakening global economy. Francois-Henri Pinault, the Chief Executive Officer has said in a statement, the gain in luxury revenue was “propelled by the momentum of our brands across all of the group’s regions.” Comparable sales rose 21 percent at Bottega Veneta, 27 percent at Yves Saint Laurent and 16 percent at other luxury brands.