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Nonetheless, the luxury and retail conglomerate voiced optimism for the rest of the year, reporting a 15.1 percent increase in sales at Gucci Group in January and February.
“It’s very clear that there will be more growth in luxury this year,” said François-Henri Pinault, who on Monday will take over as chairman from Serge Weinberg. “Luxury is strong in the United States and Asia, even if it’s weaker in Europe.”
Meanwhile, Pinault said PPR wouldn’t bid on Neiman Marcus Group, which on Wednesday said it was up for sale. “It’s too expensive,” he quipped.
PPR declined to comment on market speculation Thursday that it wanted to grow its Redcats catalogue business in the U.S. by acquiring J. Crew or Lands’ End, which Sears, Roebuck & Co. is shopping around.
PPR’s net income last year reached 940.6 million euros, or $1.17 billion at average exchange, up from 644.6 million euros, or $801.79 million, last year, boosted by strategic divestments such as the Rexel electronic components provider and the Fineraf consumer credit business.
The sale of Rexel in December was the final step in a major strategic realignment at PPR, away from its traditional business-to-business activities toward higher margin retail and luxury.
“Last year marked the successful completion of the group’s transformation as we took full operating control of Gucci Group and sold our remaining noncore businesses,” said Weinberg.
“The strong sales momentum and sharply improved profitability achieved in 2004 clearly show that PPR is entering a new chapter in its history under most auspicious terms,” he added.
In a brief presentation, Pinault saluted Weinberg’s achievements at the helm of PPR over the last 10 years. “We will follow the strategy we have put in place,” he said.
Pinault touted luxury as a key avenue of growth in years to come. “We must grow the brands to improve sales and profits,” he said. “We have the cash flow needed to assure this growth.”