Gucci Keeps McQueen Brand Going, Will Show Line in Paris

Gucci Group decided a continuation of McQeen's business would be the best testimony to his talent, Polet said.

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Gucci’s New Jackie bag.

Photo By Courtesy Photo

Gucci Group does not give breakdowns per brand. However, market sources estimate the McQueen business is approaching $100 million annually. At the results presentation on Thursday, PPR said strong demand from emerging markets fueled a turnaround in demand for its luxury goods in the fourth quarter, helping the retail-to-luxury group beat market expectations with a revenue drop of just 3.2 percent compared with the same period a year earlier.

Net profits fell 0.8 percent in 2009 to 712.4 million euros, or $993.5 million, from 718 million euros, or $1.05 billion, in 2008. Dollar figures are converted from average exchange rates for the period. PPR did not provide any profit guidance for the year.

“Emerging markets carried growth at the global level last year,” Pinault told analysts and journalists. “In the fourth quarter, there was a perceptible improvement in the trend in the United States, in particular, and to a lesser extent in Europe. This trend has been confirmed at the beginning of the year.”

Group sales fell to 4.72 billion euros, or $6.95 billion, in the fourth quarter from 4.88 billion euros, or $6.58 billion, in the same period a year earlier.

For 2009 as a whole, the group clocked revenues from continuing operations of 16.52 billion euros, or $23.04 billion, down 4 percent year-over-year in reported terms.

Pinault remained cautious about prospects for 2010. “It is too early to talk of a recovery,” he said. “It is more of a convalescence than a recovery. We must remain cautious and wait. I think the second half of 2010 could confirm a recovery in mature economies, but at a slower pace than in Asia.”

PPR is gambling on the Asia-Pacific region to be its main driver of growth this year. Out of the 40 store openings it plans for its various brands, two out of three will be in that region, Pinault said.

The Gucci Group division, which includes brands such as Gucci, Bottega Veneta and Yves Saint Laurent, saw fourth-quarter revenues ease 0.3 percent in reported terms to 929.2 million euros, or $1.36 billion, from 931.7 million, or $1.25 billion, in the year-ago quarter. This represented a 3.1 percent increase in comparable terms.

Full-year revenues at the unit were up 0.3 percent to 3.39 billion euros, or $4.73 billion, from 3.38 billion euros, or $4.97 billion, in 2008, as the global economic downturn prompted consumers to defer purchases of costly purses, watches and clothes. Emerging markets accounted for 33 percent of Gucci Group’s revenues in 2009, up from 28 percent in 2008.

Flagship brand Gucci saw organic sales fall 1.1 percent in the fourth quarter, but comparable sales rise 2.4 percent during the period thanks to strong demand for bags including the New Jackie, Icon Bit and New Bamboo. Bottega Veneta registered a 0.7 percent increase, while Yves Saint Laurent saw a 6.9 percent drop as its wholesale business fell 24 percent against the same quarter a year earlier. YSL posted an operating loss of 10 million euros, or $13.9 million, in 2009 after breaking even the previous year.

Balenciaga saw improved profitability, registering sharp growth in Asia-Pacific and Japan. Alexander McQueen went through a “rough patch” in 2009, but was “still very close to breakeven,” Pinault said, without elaborating.

PPR last year listed a majority stake in CFAO, its African distribution business, as part of its strategy of focusing on luxury and lifestyle brands. The group plans to divest its retail assets next to fund more acquisitions, but Pinault said current market conditions meant this could take some time.

“We will take the time and we will be very pragmatic regarding our next moves,” he said. “It could take two or three years, perhaps more. In any case, it is out of the question to rush things at the risk of selling our companies at a discount rate.”



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