French retail conglomerate Pinault-Printemps-Redoute is scaling back spending on its luxury division. The company described last year as the peak of its investment in such activity.
Nearly all of the EUR 100 million (£66 million) trimmed from capital expenditure across the group for the current year will come from the luxury division's budget.
Last year, Gucci Group opened and renovated 66 stores, but that breakneck pace of growth will now slow.
PPR is poised to offload its business-to-business operations to raise cash for the 45 per cent of Gucci it has yet to buy. PPR has an obligation to buy at least part of the holding still available.
During 2002, sales at the luxury goods division stood still at EUR 2.54 billion (£1.68 billion). However, consumer retailing at chains such as Fnac and Printemps, was up 0.9 per cent - 1.2 per cent on a comparable basis - to EUR 12.06 billion (£7.99 billion).
The entire business-to-business division is expected to be sold by the end of 2004 and could fetch about EUR 5 billion (£3.31 billion).
Despite the overall slump in group sales of 1.5 per cent, chief executive Serge Weinberg was optimistic about future prospects. 'The very marked improvement in business, notably in retail, justifies our confidence,' he said.
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