Gucci performs well for PPR

Gucci has delivered on its promise of a boost in profits to new owner Pinault Printemps Redoute (PPR). According to recent financial reports, the French luxury goods retailer boasted a 49 per cent rise in first-half profits, after a strong sales period for Gucci and fellow couture designer Bottega Veneta.

Known for its handbags and shoes, Gucci has seen a steady increase in turnover since PPR took it over early last year. Other luxury goods brands also performed well in the six months to June 30, though the group’s retail arm reported a drop in sales due to slow French spending. The group, which also owns British brands Stella McCartney and Alexander McQueen, said first-half net profit came to some £104.1 million – beating forecasts.

PPR chairman and chief executive François-Henri Pinault said: “Thanks to its positioning on two activities – the rapidly growing global luxury goods universe, and stable, mature retail markets – the group enjoys a higher profitability profile than that of the markets in which it participates. “Luxury goods posted excellent first-half results, notably at Gucci and Bottega Veneta.” He added: “The PPR Group is well positioned to improve its performance, as the trends of July and August clearly indicate.”

In the luxury sector, operating income leapt 76 per cent to around £72.7m with the margin doubling to eight per cent, although PPR warned that the higher comparative base in the second half might temper the growth rate. French luxury goods companies have shrugged off the impacts of a weaker dollar, global political unrest and the threatened resurgence of avian flu to show strong performance in the first half.

On Wednesday, the world’s largest luxury goods company LVMH posted an 11 per cent rise in operating profit and stuck to its 2005 earnings goals despite adverse currency effects and a provision for the closure of its flagship Parisian store, Samaritaine.

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