Handbags help line Gucci earnings
AMSTERDAM, Netherlands (Reuters) -- Luxury goods maker Gucci was upbeat on the key fourth quarter Friday as it reported a 17 percent rise in third-quarter operating income after shoppers snapped up its pricey leather handbags.
"Our fourth-quarter performance continues to be outstanding, and I believe that we will achieve excellent results for the remainder of the year,'' Chief Executive Domenico de Sole said in a statement.
Third-quarter earnings before interest, tax and amortization (EBITA) were 90.9 million euros ($112.1 million) against 77.7 million a year earlier, slightly short of a 93 million consensus figure by 12 analysts polled by Reuters.
Sales were rose 12.8 percent, on a constant currency basis, to 695 million euros in the three months to the end of October.
"The iconic Chain horse-bit handbag as well as the spectacular Fall ready-to-wear collection have been driving traffic into the Gucci stores and generating strong sales worldwide,'' said De Sole, who will leave the firm along with top designer Tom Ford in March.
"The Yves Saint Laurent's fashion and accessories business continued to make losses during the quarter. However, our efforts to re-establish the brand at the high end of luxury are bearing fruit,'' he said.
Shares in Gucci, the world's number-three luxury goods company behind LVMH and Richemont, traded 0.2 percent higher at 68.95 euros.
Group net income was 53.1 million euros versus 53.0 million last year, reflecting sharply lower net financial income as Gucci made a share buyback in October.
Gucci ahead, YSL loses
The Gucci division had retail sales growth of 11.4 percent in November, after 12.0 percent in the third quarter, and this accelerated to 21.6 percent in the December 1-14 period.
It is famous for the leather bags sporting the initials of Guccio Gucci, who founded the firm in Florence in 1923. Gucci also owns the Yves Saint Laurent, Sergio Rossi, Boucheron, Bottega Veneta, Alexander McQueen, Stella McCartney and Balenciaga brands.
Losses at Yves Saint Laurent fashion widened to 20.7 million, although YSL Beaute had a higher operating income before amortization and restructuring expenses of 35.0 million versus 34.1 million last year.
The company has suffered like its rivals from a decline in spending due to a global economic downturn, the SARS epidemic and the war in Iraq. Tourists, especially Japanese and Americans, account for the majority of spending on luxury goods.
The fourth quarter is traditionally the biggest contributor to group profits and made up more than a third of the 2002 full-year EBITA of 305 million euros. But the cumulated nine-month EBITA for 2003 is just 123.5 million so far after very weak first and second quarters.
French retailer Pinault-Printemps-Redoute has a two-thirds stake in Gucci and is set to buy remaining Gucci shares in March 2004. The shares have slipped seven percent so far this year while the DJ Stoxx European cyclicals index advanced by a quarter.
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