PPR shares lose shine despite luxury sales boost

PARIS, Oct 19 (AFP) – Shares in Pinault-Printemps-Redoute lost lustre Tuesday, despite the French luxury and retail group reporting a third-quarter sales rise, as analysts pointed to slowing demand at the company’s major stores in France.

PPR said third-quarter group sales rose 4.8 percent to EUR 5.634 billion (USD 7.047 billion) from EUR 5.374 billion a year earlier, boosted by a 9.8 percent jump in its luxury stable of businesses, which includes Gucci and Yves Saint Laurent.

Sales at retail chains such as Printemps, Coforama and Fnac in France rose 4.3 percent “despite the slowdown in household consumption, especially in September”, PPR said.

The group’s third-quarter sales were in line with analysts’ forecasts of EUR 5.56-5.65 billion.

Merrill Lynch noted that “a slowdown ahead of the key fourth quarter in France is not particularly encouraging” and kept its ‘sell’ recommendation on the stock.

Concerns about French consumers’ increasing reluctance to spend trimmed PPR share gains. PPR was up 0.33 percent at EUR 74.90 in midday Paris trading, off from an intraday high of EUR 76.0, while the CAC 40 was 1.50 percent higher at 3,714.73 points.

The group’s electricity distribution subsidiary Rexel added 2.27 percent to EUR 36.03 as the market welcomed a report in French business daily La Tribune that two bidders were vying for PPR’s 73.7-percent stake in Rexel.

La Tribune, without citing sources, said that PPR had received an offer from US investment fund consortium BC Partners and PAI to buy the stake.

Another consortium, of Eurazeo and Clayton Dubilier and Rice, acting with Merrill Lynch Private Equity, was expected late Monday to make a competing offer, it said.

The newspaper said PPR would not comment on the progress of its sale of Rexel, which posted a 4.3 percent rise in sales to EUR 1.698 billion.