April 25, 2013 / 4:26 PM / 4 years ago

PPR's Gucci and Puma sales disappoint

PARIS (Reuters) - PPR (PRTP.PA) on Thursday posted disappointing first-quarter sales, particularly for its Gucci fashion label and Puma sports brand, hit by sluggish trading in Europe and slower growth in China.

The French group, which also owns fashion houses Yves Saint Laurent and Bottega Veneta, said it was not seeing any signs of improvement in China, the luxury industry’s main engine of growth.

“We do not see any signs of a pick-up in China,” Chief Financial Officer Jean-Marc Duplaix told reporters in a conference call.

PPR said luxury goods sales in China rose around 10 percent in the first quarter but in Europe it had seen lower demand and a drop in tourist flows.

Gucci, the world’s second largest luxury brand after LVMH’s (LVMH.PA) Louis Vuitton, saw 9 percent sales growth in North America and 5 percent in Japan but they were in “high single digits,” in mainland China.

Regarding Puma, the group said the bulk of the brand’s underperformance was due to weak demand in Italy and France.

“The division has been affected by a depressed economic environment in Europe,” Duplaix said.

PPR posted total first-quarter like-for-like sales up 3.1 percent, undershooting forecasts of 5 to 6 percent growth while sales at Gucci were up only 4 percent against expectations of a 6 percent rise.

The group’s sports and lifestyle division, which includes its near 80 percent stake in Puma (PUMG.DE), saw first-quarter sales fall 2.5 percent while the market expected growth of 1 percent. Sales at Puma alone were down 2.3 percent during the period on a like-for-like basis.

PPR pledged to remain vigilant on costs and improve financial results in 2013.

The results come after several luxury goods makers including LVMH (LVMH.PA) and Hermes (HRMS.PA) pointed to sluggish trading in crisis-Europe and a slowdown in China.

Editing by Greg Mahlich

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