Luxury retail group PPR, the owner of Gucci, has reported full-year profits ahead of forecasts and expects to achieve further growth in 2008.

Recurring operating income at PPR, which owns books and electricals retailer Fnac and luxury brands such as Bottega Veneta and Stella McCartney, was up 33 per cent to €1.7 billion (£1.29 billion).

Net profit was up 34.6 per cent to €922 million(£698.5 million). Revenues rose 16.1 per cent to €19.8 billion and 7 per cent on a like-for-like basis.

Earnings were driven by the consolidation of Puma and operating profit at Fnac and Gucci, as well as its African consumer goods division CFAO.

During the year, PPR bought a two-third share of Puma for €3.33 billion (£2.52 billion) and agreed to sell YSL Beauté to L’Oréal to improve profitability.

Group recurring income at Fnac increased 15 per cent in the year and the Gucci brands were up 29 per cent. Sales at PPR’s Redcats mail order company fell in the fourth quarter.

The strongest performers within Gucci were Bottega Veneta, which was up 69 per cent, Yves Saint Laurent, which was up 35 per cent and YSL Beauté, which doubled its recurring operating income.

PPR chairman and chief executive François-Henri Pinault said: “These results reflect the strength of our brands and retail concepts, active in the fastest-growing consumer and luxury goods segments in more than 90 countries.

“Our success is also due to the ongoing implementation of our strategy, which gives the group a remarkably dynamic and balanced profile – a key competitive edge in today’s tougher economic environment. PPR is confident in delivering another year of growth and improved financial performances in 2008, while pursuing its expansion in high-growth markets.”