GUCCI, PUMA and BOTTEGA VENETA the major drivers of growth for the PPR Group
Gucci and Puma both posted double-digit revenue growth and double-digit margins in 2010, which allowed parent company PPR to achieve 6.5% top-line growth and 140 basis points of margin expansion, to 10.5%. The outlook for 2011 was upbeat but sparse. PPR expects to post another year of strong top-line growth and to make investments in the business, particularly in the Gucci brand. For 2011,mid-single-digit revenue growth is expected, primarily driven by Gucci and Puma, and modest operating margin expansion as Gucci’s strong pricing power should be slightly offset by the impact of higher cotton prices on Puma and Redcats.
By segment, Gucci’s 2010 revenue grew 18% thanks to robust demand from emerging markets. Roughly a third of the brand’s sales are now derived from Asia (excluding Japan), versus 18% in 2007. Gucci’s margins expanded 200 basis points to 22.4%, proving the pricing power of this luxury brand. Puma’s top line expanded 10% as higher consumer spending provided a tailwind, but margins contracted slightly to 12.5%.