PPR First-Quarter Sales Trail Estimates as Gucci SlowsAndrew Roberts
PPR SA fell the most since 2011 in Paris after first-quarter revenue missed estimates as softer third-party sales in Europe and fewer store openings in China led Gucci to post its weakest growth in more than three years.
Sales from continuing operations climbed 1 percent to 2.37 billion euros ($3.1 billion), the Paris-based company said yesterday in a statement after markets closed. Analysts predicted 2.41 billion euros, according to the average of four estimates compiled by Bloomberg. Excluding acquisitions and currency fluctuations, revenue rose 3.1 percent.
“The market is likely to be disappointed and concerned about the luxury division’s unexpected slowdown,” said Thomas Chauvet, an analyst at Citigroup who recommends buying shares of PPR, which plans to change its name to Kering in June. Still, “we do not think Kering’s luxury brands have suddenly fallen out of fashion.”
The shares fell as much as 7.5 percent to 165.2 euros, the biggest intraday decline since Sept. 30, 2011, and traded at 168.95 euros at 9:17 a.m. in Paris. The stock is up 20 percent this year.
PPR joins LVMH Moet Hennessy Louis Vuitton SA and Hermes International SCA in reporting slowing sales growth. LVMH this month posted its weakest quarterly growth in fashion and leather-goods revenue since 2009, citing a decline in Japanese tourism and fewer store visitors in China. Consumption is weaker in Europe, Taiwan and Korea and there hasn’t been a strong rebound in China, PPR Chief Financial Officer Jean-Marc Duplaix said on a call yesterday.
Comparable sales at Gucci advanced 4 percent, the weakest increase since the fourth quarter of 2009. That missed the 6 percent median estimate of 13 analysts. Wholesale revenue fell in the quarter as Gucci closed some third-party accounts in Italy and the brand’s performance in Asia Pacific was mixed in the period, PPR said.
PPR, which earlier this week agreed to acquire Italian jeweler Pomellato, remains “confident” of improving its performance in the full year, it said in the statement.
Sales at handbag maker Bottega Veneta grew 8.8 percent on a comparable basis, slowing from 33 percent in the year earlier period and the fourth quarter. Mixed performances in wholesale penalized strong growth in retail, PPR said. Saint Laurent sales gained 19 percent, while revenue from other luxury brands advanced 6.9 percent, PPR said.
Overall, first-quarter sales at the luxury division rose 6.4 percent on a comparable basis, about a third of the rate of the year earlier period. Sports-and-lifestyle revenue declined 2.5 percent, weighed down by a difficult textile and sporting-goods market, especially in western Europe, PPR said. Puma sales fell 2.3 percent.
The company didn’t report profit for the quarter.
PPR plans to spin off the Fnac media and electronics chain in June and sell online and mail-order retailer La Redoute in the second half of the year.