Bloomberg reports that Gucci is doing better in this recession than analysts expected. Bloomberg says demand for Gucci's $3,990 Hysteria handbags in Asia is helping to boost revenues for brand owner PPR SA.
Gucci lifted fourth-quarter sales 3.4 percent to 640 million euros ($810 million), Paris-based PPR said today, beating JPMorgan Chase & Co.'s estimate of 622 million euros. Excluding currency moves and acquisitions, Gucci's sales slipped 0.8 percent, less than Citigroup's prediction of a 6 percent drop and Morgan Stanley's forecast of a 1.7 percent decline.
The brand, whose double-G logos and rockabilly fashions are designed by Frida Giannini, helped PPR report 2008 operating profit that beat analysts' estimates today, sending the shares up 7.2 percent. Sales in China, Hong Kong and Macau, where Gucci now has 33 outlets, rose 42 percent last year. The label represents 11 percent of PPR's sales and 36 percent of earnings.
"Major brands like Gucci and Louis Vuitton hold up better in a downturn, as consumers reduce their buying and concentrate on the most prominent labels," said Luca Solca, an analyst with Sanford C. Bernstein who has an "outperform" rating on PPR shares and a price estimate of 60 euros.
Bloomberg says seven of luxury group PPR SA's eight labels made an operating profit in 2008. However, the company is still cutting 1,200 jobs at its Fnac and Conforama retailers.
Photo: Hysteria Medium Top Handle Bag sold at Neiman Marcus
Bloomberg 
