PPR announced consolidated revenues of €2.6 billion for the fourth quarter of 2012, up by 17.5 percent from the same quarter a year ago in terms of euros and by 11.7 percent based on comparable group structures and exchange rates. For the year as a whole, consolidated revenues from continuing operations amounted to €9,736 million, up by 20.8 percent from 2011 and by 10.6 percent on a comparable basis. Net income from continuing operations, excluding non-recurring items, went up by 28.2 percent for the year to €1,269 million.
The positive results of the French conglomerate for 2012 were driven by the strong performance of all the brands in its Luxury Division, in contrast with declining sales in the Sport & Lifestyle Division. The management claims that the good balance in the group's geographic presence and its sales formats make it more resilient to changes in the economic environment.
The revenues of PPR's Luxury Division grew by 27.6 percent during the past year. The Gucci brand rose by 18.9 percent, while Bottega Veneta registered a 46.7 percent increase and Yves Saint Laurent went up by 58.9 percent. Revenues from “other brands” in the Luxury Division, including Sergio Rossi, grew by 73.1 percent. In contrast, the revenues of the Sport & Lifestyle Division, which is led by Puma and Volcom, diminished by 12.1 percent, with the Puma brand down by 13 percent from 2011.
In 2012, the group pursued its expansion in rapid-growth markets, where revenues increased by 13.7 percent on a comparable basis and made up for 37.6 percent of sales, one full percentage point more than in 2011. Sales in the Asia-Pacific region, excluding Japan, accounted for 25 percent of total sales against 24.5 percent in 2011 on a comparable basis.
Revenues generated outside of the Eurozone rose by 11.6 percent in 2012 and accounted for 78.6 percent of the turnover for the year, versus 77.9 percent in 2011. The sales contribution from France remained flat at 5.5 percent of the total revenues on a comparable basis.
Including special items, PPR's recurring operating income for 2012 reached €1,792 million, up by 19.3 percent on 2011, indicating an operating margin of 18.4 percent. In particular, the Luxury Division improved its operating profit by 27.6 percent to €1,611.6 million, with results rising by 18.9 percent to €1,126.4 million for Gucci and by 58.9 percent to €65.0 million for YSL.
The Ebitda posted by the group climbed by 18.8 percent to €2,067 million. Excluding amortization and depreciation, operating results improved by 18.8 percent to €2,067 million. The gross margin for 2012 amounted to €5,960 million, up by 19.8 percent on the previous year and by 14.3 percent based on comparable exchange rates. Operating expenses increased by 20 percent, or by 15 percent based on comparable exchange rates. In particular, personnel expenses increased by 21.5 percent while marketing and advertising expenditures rose by 19.3 percent.
For the year, the group reported a net loss of almost €276 million from discontinued operations, as the operating profits of Fnac and Redcats were more than offset by asset impairment and restructuring charges. The net income totaled €1,048 million, up by 6.3 percent on 2011, while the adjusted net income ? excluding extraordinary charges ? amounted to €1,269 million, a 28 percent increase from the previous year.
PPR has undergone many structural changes in recent months. During 2012, PPR closed the acquisition of 100 percent of the share capital of Brioni, one of the best-known men's fashion houses. Brioni was consolidated in PPR's financial statements from Jan. 1, 2012. In July 2012, Puma announced that it intended to speed up and significantly expand the scope of its transformation program, aimed at increasing efficiencies and streamlining its cost structure, especially in Europe (more on this in SGI Europe).
During the second half of 2012, PPR initiated a plan to demerge and float Fnac, the international retail chain specializing in cultural and electronic products. To take the Fnac group public, PPR will pay its shareholders a special stock dividend corresponding to the Fnac group shares held by PPR. During 2012, Fnac pursued a plan announced in January 2012 aimed at generating annual savings of €80 million to restore its competitiveness. As part of this plan, an agreement was reached in November 2012 to sell Fnac Italy to an investment fund, Orlando Italy. The sale was completed in January 2013. In November 2012, PPR announced that an agreement had been signed between Redcats and Northern Tool + Equipment (NTE) to sell the Sports & Leisure activities of Redcats USA, including the Sportsman's Guide and the Golf Warehouse, for an enterprise value of $215 million. The sale was completed on Dec. 17.
The group's outlook for 2013 calls for robust revenue growth and enhanced operating and financial performance. Despite a mixed economic environment in early 2013, the core strengths that drove PPR's growth during 2012 are expected to drive growth also throughout 2013. The group also plans to finalize its strategic repositioning in the Luxury and Sport & Lifestyle sectors.