Profit soars 55% at Gucci division

First-half profits at French luxury group PPR grew at the fastest pace in three years, driven by its luxury goods division.

Net income at the conglomorate, which owns Gucci, Bottega Veneta, Yves Saint Laurent and other luxury brands, shot up 55 per cent to 303 million (£204.5 million) for the six months to June 30.

Excluding the acquisition of German sportswear brand Puma, operating profit jumped 26.5 per cent, driven by a 55 per cent uplift across the Gucci division.

Its success is the latest sign that luxury retailers are well-placed to weather the downturn in customer spending, triggered by successive rate rises and global markets turmoil.
The strongest increases in luxury goods operating profit were recorded by Bottega Veneta, Yves Saint Laurent and YSL Beauté.

PPR chief executive François-Henri Pinault upped the number of luxury store openings during the year to counteract lower growth at the group’s Fnac electronics arm and Conforama furniture chain.

Total sales at the group climbed 11.4 per cent to 9.2 billion (£6.21 billion) and like-for-likes rose 5.6 per cent. Pinault said that its strong performance “strengthens our determination to further improve the group’s financial results and increase value creation in 2007”.

The results follow the acquisition of 62 per cent of Puma in April for 5.3 billion (£3.58 billion).

Pinault said that the purchase could accelerate a fusion of the luxury and sportswear sectors, suggesting that Gucci and Yves Saint Laurent might use Puma’s expertise to launch their own range of sports clothing.

Separately, the conglomerate is threatening legal action against eBay if it doesn’t take a stronger stance on counterfeit branded products sold on the online
auction site.

Rival luxury group LVMH sued eBay in France over its circulation of fake Louis Vuitton products last year.