09/14/2000 : 2000 Half Year Results

 
Sales : +24.9%

EBITDA *: + 35.6%

Operating income : + 35.1%
Attributable net income : + 23.1%
* Operating income before tax, depreciation and amortization

The Supervisory Board of Pinault-Printemps-Redoute, chaired by René de La Serre, met on September 13, 2000 and approved the Group's audited consolidated results as at June 30, 1999, as presented by the Management Board and attested by the auditors .
 
(a) adjusted in accordance with the new consolidation method as of January 2000.

The interim consolidated financial statements have been prepared for the first time in accordance with the new consolidation methods by fully consolidating the Credit and Financial Services division companies and capitalizing finance leases. Consolidated net indebtedness is now presented before financing of Credit and Financial Services division customer loans. Certain adjustments have also been made to the consolidated income statement (cash discounts previously recorded under interest income and expense have been included in operating income and employee profit-sharing has been included in payroll expenses).

Strong business growth

Group sales surged 24.9% to € 11.3 billion (FF 74.2 billion). This strong performance reflected sustained organic growth in France and internationally, as well as an active strategic acquisitions policy. Organic growth strongly accelerated from 3.5% in the first half of 1999 to 8.1% for the first half of 2000, helped by healthy consumer demand and the commercial efforts of the Group. Acquisitions boosted consolidated sales by 11.1%. Internet sales were multiplied by four during the semester.

New increase in profitability
Consolidated operating income amounted to € 791.1 million (FF 5,189 million), representing an increase of 35.1%. Operating margin again rose by 0.5 point to 7% from 6.5% for the first half of 1999. This improvement reflected 28.8% growth in gross margin, driven in particular by the consolidation of the high-margin Luxury Goods business over a period of 6 months, as well as by further productivity gains in the Retail and Business to Business divisions. Without development costs, operating margin stood at 7.4%, a 0.6 point gain against first half 1999.

Net interest expense amounted to € 122.7 million (FF 805 million) versus € 76.5 million (FF 502 million) for the first half of 1999. The key reasons for the 60.4% increase were the Group's ambitious capital spending and especially external growth programs, including Gucci's acquisitions of Yves Saint Laurent and Sergio Rossi.
Minority interests amounted to € 158.9 million (FF 1,042 million), up 76.6%. This increase primarily reflects the fact that Gucci was consolidated over the full period. The increase in the Group's interest in Guilbert in the second half of 1999 slightly alleviated this effect.

Before goodwill amortization net of minority effects, attributable net income amounted to € 318,9 million (FF 2 092 million), up 21.5%. Attributable net income after goodwill amortization increased by 23.1% to € 270.6 million (FF 1,775 million).
Diluted earnings per share amounted to € 2.28 (FF 14.93), representing a 22.1% rise compared to first-half 1999.

A healthy financial structure and sustained investment
The Group continued its investment policy. Gross operating investments amounted to
€ 259 million (FF 1,699 million), representing a rise of 8.2%, due mainly to 15 store openings in the Retail division and 4 in the Luxury Goods division. Out of the total capital expenditure, 59% was earmarked for innovations and development and 23% for logistics and information technology.

Net financial investments , in an amount of € 1,607 million (FF 10,541 million), mainly included Gucci's acquisition of Yves Saint Laurent and Sergio Rossi, Rexel's acquisition of Branch (United States) and the acquisition of 3 Conforama stores which were previously franchised.

Net cash from operating activities before changes in working capital amounted to € 595.3 million (FF 3,905 million), up 32.6% on first-half 1999.
The Group is in a strong financial position as of June 30, 2000, with net interest expense covered 7.4 times by operating income. Net financial debt increased to € 4,658.6 million (FF 30,559 million) at June 30, 2000 from € 3,187.7 million (FF 20,910 million) one year earlier, and shareholders' equity rose by 13.8% to € 6,822.9 million (FF 44,755 million). The net debt-to-equity ratio increased slightly to 0.68 at June 30, 2000 from 0.53 at the end of first-half 1999.

Subsequent events
The Group has announced the following developments since the end of the first half:

2nd half : Consolidation of Boucheron in the Pinault-Printemps-Redoute's accounts: In May, Gucci signed an agreement to acquire Boucheron, one of the world's most prestigious and exclusive makers of jewelry, watches and perfumes.

July: Rexel's acquisition of Westburne: This transaction raises Rexel to a position among the USA's three largest distributors of electrical equipment. Westburne is the leading distributor of electrical equipment in Canada and one of the leaders in the United States. Its 1999 sales amounted to € 1.8 billion (FF 11.7 billion). This acquisition will have an accretive impact on the earnings per share, after goodwill amortization of Pinault-Printemps-Redoute in 2000.

July: Employee Stock Ownership Plan : Value in Action (VIA) is the Pinault-Printemps-Redoute Group's first Employee Stock Ownership Plan. Nearly 90% of Group employees world-wide will be eligible to participate in the Plan. The first tranche applied to 47,000 employees in France and resulted in the issue of 600,000 shares. The take-up rate was 68%. The second tranche will be launched in the fall of 2000 for employees in 15 other countries and two French overseas territories. A total of 200,000 shares will be offered for subscription. The whole plan represents 0.5% of the Group's capital stock.

September: Conforama's acquisition of a controlling interest in Emmezeta : Emmezeta is Italy's second largest household equipment distributor with 1999 sales of €404 million (FF 2.7 billion). Conforama will use this acquisition to enter the Italian market and become the world's second largest furniture distributor. This operation, which will not be financed and consolidated until 2001, will be neutral for the net results of Pinault-Printemps-Redoute for 2001, after amortization of goodwill and financial costs and prior to synergies.

Favourable outlook
The economic climate should remain good in the second half of 2000. Europe is expected to enjoy sustained growth, the US economy should remain on an even keel and the Asian recovery looks set to continue. In France, consumer confidence, bolstered by falling unemployment, should result in high levels of household spending. The dynamism of our companies, the acquisitions completed, the strong growth of the Luxury Goods division and the rapid development of the Internet sites provide us with a powerful confidence in the prospects of the Group, in the short and medium term.

CONTACTS

PRESS	ANALYSTS
Laetitia OLIVIER	David NEWHOUSE
Tel : (+33) 1 44 90 63 80	Tel : (+33) 1 44 90 63 23