PPR Boosts First Half Turnover 25 Percent
CEO Serge Weinberg has refocused corporate strategy toward full utilization of all distribution channels, from diversification of traditional catalogs to globalization and a "bricks-and-clicks" approach to e-commerce.
It seems to have paid off. Gross profits were up 35 percent to 5.2 billion francs ($666 million), while net profits were up 23 percent to 1.8 billion francs ($230.7 million).
Writing in the French distance-selling newsletter Catalogue's, editor Annie Rigoureau noted that "more than ever the group is betting on distance selling, specifically on e-commerce which it expects to be profitable in 2003."
Before the year is out, PPR expects to expand more solidly into the financial services sector, and it has already moved to strengthen its position in the office products market.
In September its Guilbert subsidiary in effect bought JPG, the second-largest business-to-business office products company in France, from Boise Cascade, which pulled out of the European market (see DM News International, Oct. 9).
E-commerce sales still make up a tiny fraction of PPR's turnover -- 0.6 percent -- but numbers are growing significantly. The group has 65 sites in operation and sells product on 52 of them.
Web turnover grew fourfold in the first half to 150 million euros (about $140 million) with the bulk, some 100 million euros, coming from Internet sales to consumers. PPR expects Web losses to shrink to 50 million euros.
Some sites are doing better than others. Guilbert's guilweb.com is already profitable, and Redcats, the global catalog brand of La Redoute, reached breakeven in the first half of the year.
Last year the company created a subsidiary, PPR Interactive, to coordinate and expand Internet strategies and to integrate new technologies such as wireless application protocol and UMTS -- Universal Mobile Telecommunications System -- the third generation of wireless phones now coming on stream.
Weinberg has been criticized for moving too slowly onto the Web, Rigoureau noted, but Weinberg argued that his bricks-and-clicks strategy was more judicious and offered better prospects for paying off.
In addition, he pointed out that he has taken a minority stake in some 10 dot-com start-ups and has only pulled out of one of them. He does not intend to take his Internet group into the stock exchange.
Redcats, which includes La Redoute in France and Brylane in the US, boosted turnover by almost 8 percent to 2.2 billion euros, with sales in France well ahead of the market average.
La Redoute has not given up on its massive general catalogs but, like most other major European catalogers, has tinkered with the formula to target audiences more precisely.
"We realize that niche catalogs that include material from the big book enrich our offering," Paul Delaoutre, CEO of La Redoute in France, told Catalogue's. A test for a children's book was positive, and he plans to test a catalog for seniors.
The Web site is designed to keep the big book current by changing the home page offerings every three weeks and by putting one new offering a day on the Web. The idea is to move ordering away from the phone and toward the cheaper Internet.
Books also will become more international. One textile catalog will feature ladies' fashion and lingerie and is based on the book La Redoute used to enter the American market last year with some success. One million copies will be dropped three or four times a year.
Finally, PPR is opting to expand use and distribution of existing catalogs rather than develop new ones from scratch. Thus Brylane's Chadwick catalog will be introduced in the UK late this year or early next year.