Luxury group Pinault Printemps Redoute announced on Thursday that net income had increased by 11.2 percent last year. Results were driven by luxury goods and a strong start to the year by Gucci Group. The group added that it had confidence for 2006. Luxury sales until the end of February climbed 19 percent, especially thanks to Gucci, Bottega Veneta, Balenciaga and Yves Saint Laurent. “Luxury should have a very solid year,� group chairman and chief executive Francois-Henri Pinault told a group of analysts and reporters. He said that the group would continue to focus on organic growth, but “strategic� acquisitions were not ruled out. He added that the Redcats mail-order division would benefit from the acquisition of a non-clothing operation with a strong internet presence in the US .

Group net income rose 11.2 percent to €539 million (£370 million) on revenues up 4.2 percent to €17.76 billion. Pinault said retail sales had increased 4.2 percent through February and predicted better times for the group's retail operations. Meanwhile, income from recurring operations rose 9.9 percent to €1.08 billion and operating income from PPR's luxury division soared 35.4 percent to €390 million. Gucci outperformed the other brands, with operating income growing 14.7 percent to €485 million. Pinault predicted more growth for the brand this year and said that aggressive spending on marketing would continue.

The company is also expanding Gucci's retail presence with three store openings set to take place in China this year. Further flagship openings in Tokyo and Hong Kong emphasize the increasing importance of the Asian-Pacific market for luxury retailers. Bottega Veneta posted profits of €14 million, up from losses of €7 million in 2004, thereby emerging as a surprisingly stellar brand. The brand will open 10 stores as PPR forges ahead with the growth of this brand. “This brand has a much greater profit potential than we initially thought,� said Pinault.

Yves Saint Lauren's performance improves late last year as sales rose 16 percent in December, thanks to an enthusiastic reception of designer Stefano Pilati's cruise collection. In February, full-price sales of YSL products rose 20 percent, which gives Pinault cause to believe that the brand would “significantly reduce losses� in 2006. The industry has speculated that Gucci Group might replace Stefano Pilati as the brand's women's wear designer, but Gucci and PPR executives have denied these rumours out of hand. Other brands such as Sergio Rossi, Boucheron, Alexander McQueen, Stella McCartney, Christian Bedat and Balenciaga, have reduced losses by 64.8 percent to €13 million. Pinault said most of the “smaller� brands were ahead of their 2007 deadlines to turn profits and added that store openings would be stepped up.