Monday, 3 August 2009

PPR And Prada Each Have Their Own Financial Crises – 3/8/09

The gap between Italian competitors Gucci and Prada seems to be widening as Gucci continues to deliver strong sales, while the 'other' Italian, Prada, has reportedly appealed to Swiss investors for a financial boost.

According to an Associated Press article, Gucci delivered a "solid performance" with help from emerging markets, where sales of luxury goods rose 15 percent over six months.

Sadly, French luxury and retail group PPR SA, owner of the Gucci and Yves Saint Laurent brands, reported a 76 percent drop in earnings for the first-half, after sales fell at its Conforama furniture stores, FNAC books-to-electronics chain and Redcats catalog unit. However, PPR’s Chairman and CEO, Francois-Henri Pinault, said we are "satisfied with our performance to date. We are doing everything we can to ensure that the Group weathers the current developments and seizes opportunities as soon as the crisis subsides."

The good news for PPR was that sales rose 3.8 percent at German sportswear company Puma AG, which they own 64 percent of. And for the Gucci and Bottega Veneta brands, overall global sales increased by 8.3 percent and 2.7 percent respectively in the first half.

Due to these financial woes, PPR won’t be offering to bail out Prada any time soon. We read in a Reuters report that Prada’s bankers have offered Compagnie Financiere Richemont SA, owner of luxury brands like Cartier and Montblanc, a sizeable stake in the company. This is an unconfirmed report at the moment, but we’ll let you know the minute it becomes official.

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Melinda O’Rourke is the founder and Director of MO Luxury, a dynamic, Sydney-based management firm specialising in luxury brands and services. Melinda and her associates at MO work with local and international brands across prestige retail, fashion, fine jewellery, timepieces and specialised services. Melinda is well-connected, well-read, and well-versed in the demands of the luxury market and its client base. Her advice is firmly based in objectivity and ultimately, accountability. Melinda offers constructive counsel and both strategic and creative thinking and is able to draw upon a strong network of specialised talent to compliment the MO Luxury team as needed. Melinda enjoys excellent industry relationships and is regularly quoted in the business and fashion media. Read more about MO Luxury,