Luxury goods firms are benefiting as much from the economic turmoil as low-cost food and clothing companies at the other end of the retail spectrum
Luxury brands Gucci and Hermès yesterday posted sparkling profits as fears of recession in traditional markets were brushed aside by soaring demand from the well-off.
Gucci parent PPR said first-half operating earnings jumped 24% to €742m (£598m), with chief executive François-Henri Pinault pinpointing the group’s ability to “take advantage of periods of slower growth”.
Hermès, which is extending its holding in fashion house Jean-Paul Gaultier to 45%, said operating earnings rose to €204m from €179m and its profit margin jumped higher to 25.1%.
The two groups’ figures add lustre to the notion that luxury-goods firms are benefiting as much from the turmoil as low-cost food and clothing companies.
Gucci, home to designers Alexander McQueen and Stella McCartney and majority owner of sportswear firm Puma, which backs athletes such as Jamaican Olympic champion Usain Bolt, made an operating profit of €285m, a rise of 13% in real terms. Overall PPR net profit came in up 17% at €344m. The group said: “PPR is confident in its outlook for the second half of 2008 and stands by its objectives for growth and improved financial performance.”
The group also owns Yves Saint Laurent clothing, which reduced its losses to €12m and has sold off its cosmetics arm, YSWL Beauté.
Hermes, makers of luxury scarves and handbags and owners of Lobb, the British shoemaker, said it plans to open or renovate 15 of its stores in the second half of this year in response to increased demand.
French retailer Carrefour, which is engaged in a price war with budget food stores such as Aldi and Lidl, said, meanwhile, its operating profits rose 5.5% in the first six month to €1.4bn on the back of strong demand in Latin America. The world’s second-largest retailer had issued a profits warning at the end of June.