1:19 p.m.
Major Luxury-Goods Conglomerate PPR, which includes such famous brand names such as Gucci, Yves St. Laurent, Sergio Rossi and Balenciaga, as well as newly acquired sports brand Puma, is feeling the pinch of the global credit shakedown as Credit Suisse downgraded its rating of the PPR stock from “outperform” to “neutral”, sending shareholders scurrying for the exits.
PPR Cut by Credit Suisse on `Conglomerate’ Concern
“PPR SA, the French owner of Gucci Group, was downgraded by Credit Suisse, which said the company deserves a “greater conglomerate discount” after expanding its non-luxury business by acquiring Puma AG this year . . . “The group is becoming less, rather than more, strategically focused,” the analysts wrote. “We continue to feel uneasy about the widening scope of the business.”
That’s a no-confidence vote from the analysts who believe that PPR has expanded into a volatile and extremely competitive marketplace at just the wrong time.
“According to some analysts, another acquisition is the last thing PPR needs . . . Earlier this month, Societe Generale analyst Nathalie Longuet downgraded PPR to “sell” from “hold” after concluding that investing in new acquisitions, as well as a potential decline in the demand for luxury goods, would hurt the company’s earnings going forward.”
Meanwhile, internet luxury retailer Net-A-Porter today initiated a post-Thanksgiving sale on a spate of fall fashion goods. A surprising number of allegedly “must-have” items are seeing 40% to 50% price cuts, and this is even before the expiration of the holiday party cycle for which these pieces have been clearly designed. I’ve seen Matthew Williamson dresses and Marc Jacobs bags go on sale in the shopping doldrums of February, but have never seen them so steeply discounted just days after Thanksgiving.
Are retailers blinking?
U.S. Economy: Home Sales Slide More Than Forecast
“Defaults on subprime mortgages have prompted banks to tighten lending standards, while foreclosures add to a glut of unsold properties that’s putting pressure on home prices. Lower property values raise the risk that consumers will curtail spending, making businesses more cautious about investing and compounding a slowdown in economic growth, economists said . . . ‘I expect we’re going to see a pretty significant slowdown in consumer spending in the first half of next year,’ said Christopher Low, chief economist at FTN Financial in New York.”
