* PPR says to look at outdoor acquisitions once Puma is
* Says early-year trading in line with last year
* Shares reach 12-year high
By Astrid Wendlandt
PARIS, Feb 15 Shares in PPR soared to
a 12-year high on Friday after the French luxury and sports
brand group posted forecast-beating annual profits with an
upbeat trading update and underlined its commitment to overhaul
struggling sports brand Puma.
PPR which owns fashion labels Gucci and Bottega
Veneta, said it wished to continue expanding in the luxury and
sports sectors but would only look into making acquisitions in
the outdoor gear sector once Puma was out of the woods.
"Once Puma is back on the path of growth, then we will look
at growth opportunities in the outdoor sector," PPR Group
Managing Director Jean-Francois Palus said at the annual results
presentation in Paris.
PPR said it was determined to improve the market position
and organisational structure of Puma, which saw its profits
slump 70 percent last year and is going through its biggest
reorganisation in 20 years.
Asked how long it would take to reverse Puma's fortunes,
Palus said : "It is not a question of patience but of will. We
are determined to turn round this company."
The group's operating profit reached 1.76 billion euros in
2012, beating a Thomson Reuters I/B/E/S estimate of 1.70 billion
euros as resilient growth of its fashion and luxury labels
helped make up for lower profitability at Puma.
Shares in PPR rose as much as 8 percent, propelling them to
a 12-year high of 172.75 euros and making them the strongest
gainer of the French CAC-40 index of blue chips which
itself was flat by midday.
By 1100 GMT, PPR shares, which have gained nearly 22 percent
since Jan, were up 7.20 percent at 171.30 euros.
PPR - which stands for Pinault, Printemps, La Redoute - has
seen its valuation hurt by uncertainty about Puma, and about how
long it will take PPR to exit the retail sector, which is
generating much lower growth than luxury and sports brands.
PPR, which used to own department store Printemps and
retailer Conforama, is still trading at a discount to its luxury
peers, or about 14 times next year's earnings against the
European sector's average of 15.5 times.
Palus said he expected to complete the sale of mail order
business La Redoute this year, concluding the disposal process
of the group's Redcats division. Having failed to find a buyer
for books and CD retailer Fnac, PPR will spin it off via a share
distribution to existing shareholders once the transaction is
approved at the group's annual general meeting in June.
The Redcats disposal and offloading of Fnac allowed PPR to
recognise them as discontinued operations and avoid including in
its accounts the units' combined net loss of 276 million euros.
The outcome included restructuring charges of 149 million
euros and 288 million euros in impairment charges on which PPR
management did not comment on Friday.
PPR's luxury division saw its revenue rise 14 percent in the
fourth quarter, with Gucci, the world's second-largest luxury
brand behind Louis Vuitton, up 8.2 percent in
comparable terms and Bottega Veneta up 32.7 percent.
"PPR's luxury division is enjoying one of the best sales
growth and margin momentum amongst luxury players," HSBC said in
Comparatively, like-for-like revenues from fashion and
leather goods at LVMH, which include brands such as
Celine and Kenzo but are dominated in size by Louis Vuitton,
only rose 5 percent in the fourth quarter.
Meanwhile, during the same period and on the same basis,
sales from Ferragamo rose 11 percent, from Burberry
9 percent and from Tod's group 7 percent.
Looking ahead, PPR Chief Executive Francois-Henri Pinault,
said early-year sales trends were in line with last year but
warned the timing of the Chinese new year which this year fell
in Feb. as opposed to Jan. last year could have an impact.
The group did not give a more precise forecast other than to
say it expected to continue increasing sales and profits in
PPR proposed a dividend of 3.75 euros a share for 2012, up 7
percent against the previous year.