(Adds details, background, CEO comments)
By Astrid Wendlandt
PARIS, June 26 (Reuters) - Baccarat sales are expected to remain in decline this year as market conditions deteriorate in Europe even more than in 2013, the head of the French crystal specialist told the company’s annual general meeting on Thursday.
Last year, Baccarat’s sales fell 6.3 percent to 106.5 million euros ($144.7 million), and its 2012 operating profit of 4.68 million was followed by a loss of 6.67 million.
“The situation has worsened in Europe progressively and this year even more so than last year,” Baccarat Chief Executive Daniela Riccardi said.
“If this situation does not improve, it will be very difficult for us to have positive growth in reported terms,” she said, adding that the yen’s weakness against the euro was also a problem for the company.
Riccardi said the maker of crystal glasses, jewellery and bottles for spirits such as cognac had been hit hard by China’s anti-corruption measures, which dented cognac sales in the country.
The CEO said the yen’s depreciation against the euro hit sales last year, once translated into euros, even though they grew in underlying terms. The company makes a little over a quarter of its turnover in Japan and about a quarter in France.
She also said Baccarat’s jewellery sales, which fell 11 percent last year, had suffered from delays to product deliveries.
Riccardi, who also sits on the board of Gucci-owner Kering and previously worked for Diesel and Procter & Gamble, joined Baccarat a year ago, following a succession of CEOs at the company’s helm since 2006.
Baccarat said Riccardi’s base salary and bonus for 2014, based on meeting certain objectives, would total 1.5 million euros, and that she would receive 165,000 euros in rent allowance and 35,000 euros for her children’s education together with other expenses such as a car.
Riccardi declined to say what her objectives for the year were aside from improving the company’s profitability.
However, she said that if market trends remained the same, “it would be complicated for us” to return to profit at the net and operating level in 2014.
Riccardi said she hoped moves to prune Baccarat’s product portfolio to 1,000 items from 6,000, coupled with marketing around the brand’s 250th anniversary this year would eventually bear fruit and help it return to growth, both in terms of sales and profit.
She added that Baccarat, which is controlled by investment firms Starwood Capital and Catterton Partners, planned to open a luxury hotel in New York in December.
Baccarat shares, which have lost 5 percent so far this year after climbing 32 percent in 2013, closed up nearly 4 percent on Thursday at 216.95 euros, giving the company a market value of 180.2 million euros. ($1 = 0.7359 Euros) (Editing by James Regan)