PPR has announced that the Gucci Group, which runs all its luxury goods operations, will be managed directly by the group's chairman and chief executive, François-Henri Pinault. In the shake-up, Robert Polet will leave the group in the coming weeks. He has been CEO of the Gucci Group since 2004, when he replaced Domenico De Sole. Meanwhile, Alexis Babeau, the chief operation officer of Gucci, will become deputy chief executive of the group's luxury operations, reporting to Pinault.
The new structure is intended to foster closer collaboration between the PPR and Gucci teams for the development of the individual luxury brands, while PPR seeks to acquire other iconic brands of apparel and accessories to add to its portfolio.
Polet has done a good job at Gucci Group and he is leaving on amiable terms. Under Polet's stewardship, PPR's luxury goods business doubled its sales, on a comparable basis, and tripled earnings. The PPR group announced in October the reorganization of its sports and lifestyle operations, centered around the Puma brand. They are being led by Puma's longtime chief executive, Jochen Zeitz, until PPR finds his successor.
The change of management at Gucci Group, which is effective from March 1, goes with a new structure under which each luxury brand will remain autonomous, with its own CEO and its own designer. However, the group will be striving for more integration between the individual units to optimize synergies and resources for corporate support functions. Strong synergies are planned in terms of back office operations, including human resources and real estate development, but each brand will continue to have its own manufacturing and sourcing apparatus.
As part of the reorganization, the group announced that Paul Devene will replace Valérie Hermann as chairman of Yves Saint Laurent (YSL) in April. After six years at the helm of the fashion group, Hermann has decided to move to the U.S. to pursue a new professional opportunity. Between 1998 and 2008, Devene held senior positions at the fashion houses of Courrèges, Nina Ricci and Lanvin. PPR has also appointed Stefano Comotti as head of internal audit for the PPR group. He will report directly to Pinault and will be in charge of overseeing the performance of the group's subsidiaries.
Pinault confirmed the group's intention to sell two of its retailing companies, Fnac and Redcats. The latter owns the e-commerce platform shoestyles.fr among other properties. He added that the group is in no hurry to sell the businesses but stressed that market conditions are favorable for disposals.
PPR is scheduled to finalize the sale of its furniture retailer chain, Conforama, to a South African group in March for €1.2 billion plus €400 million in additional proceeds. Market expectations are that PPR could raise more than €3.0 billion from the sale of Fnac and Redcats.
The funds would help PPR pursue acquisitions in sports, lifestyle and luxury. Pinault dismissed concerns that the group may acquire assets at unreasonable prices. The group is already looking at takeovers in sports and lifestyle and the next acquisition is more likely in that sector. PPR is focusing on brands that offer strong synergy potential with Puma, especially in sourcing and logistics. He added that Puma's objective of reaching annual sales of €4 billion in five years' time is based on organic growth and does not depend on acquisitions.
In the luxury sector, PPR is targeting brands with a strong identity. Pinault said that all the luxury brands of the group have the potential to grow on their own and acquisitions are not needed to boost results in this sector. He was upbeat about the growth prospects of the luxury market in 2011. The group is planning a double-digit increase in capital expenditures for its luxury operations this year, involving the opening or refurbishing of stores and developments in Latin America and in e-commerce.