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Retail giant PPR continues to refocus with acquisition

By Rashmi Kumar

Family-controlled luxury retail group PPR announced on 2 May that it will acquire sportswear brand Volcom for €410.9 million, in a further attempt to refocus PPR on the luxury and lifestyle division.

In a statement, the group said that it will buy 100% of California-based Volcom’s shares as it tries to expand PPR’s sports and lifestyle operations. It expects the deal to be completed by the third quarter of the year.

The purchase is a further example of PPR’s strategy to specialise in clothes and accessories focused on the luxury markets.

“The acquisition (of Volcom) represents an important transaction for PPR in its sports and lifestyle group, providing PPR with a leading active apparel brand,” the group said in a statement.

PPR, headed by second-generation Francois-Henri Pinault, sold its furniture group Conforama in March 2011, and reports say that it plans to sell its catalogue businesses Redcats and the Fnac brand by the end of the year.

Reports also say that the Paris-based company, which owns the Gucci and Puma brands, plans to make more acquisitions to further expand its sports sector. Acquisition plans may be helped by the group’s first quarter results, which saw a 9% growth in revenues to €3.7 billion, compared to the same period last quarter, with its sports, lifestyle and luxury group recording a 20.6% rise in sales.

The group attributed the increase in revenues to strong performance in the emerging countries. The growth is good news for chairman and chief executive Pinault, who decided in February to directly manage the luxury division of PPR, as a part of his plans to re-organise the group’s operations.

In an interview with the Financial Times, Pinault said: “The luxury brands represent two-thirds of the profit of the group and I want to be directly involved in that business. In the new PPR, the mother company of all the brands will be PPR, instead of the super-mother.”

Pinault, who took to the top job in 2005, was quick to spot the recession and engaged in aggressive cost-cutting measures to soften the blow of the credit crisis. His forward planning proved successful as the firm fared considerably better than many of its rivals in the luxury goods industry.

Founded in 1963 by his father Francois Pinault, PPR had 2010 revenues of €14.6 billion.