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Gucci goes shopping
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December 14, 2000: 7:32 a.m. ET
Italian fashion house has $2.5B to spend; 3Q profit rises 18% to $114M
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LONDON (CNNfn) - Italian luxury goods maker Gucci Group NV said Thursday it is still looking to add to its growing collection of brands via new acquisitions and has $2.5 billion to spend.
"We will continue (to look for takeovers)," said Chief Executive Officer Domenico De Sole. Gucci's conditions for any takeover would include the requirement that the return generated by the acquired business is greater than the cost of capital, he added in an interview with Reuters.
De Sole also said in a statement the company expected sales in the Gucci-brand business to grow at a double-digit percentage rate in 2001 and single-digit growth at fragrance unit YSL Beauté.
Gucci posted better-than-expected third-quarter net profit of $114 million, up 18 percent from $96 million a year earlier. Analysts polled by Reuters had expected profit around $90 million.
Gucci shares were down 3.6 percent at  100.95 in late morning trade in Amsterdam.
Sales at the Gucci division for the three months ended Oct. 31 rose 22.6 percent to $375 million. Gucci said strong sales of highly profitable leather goods helped its operating profit margin rise to 32.6 percent from 23.9 percent a year earlier. Operating margin, a measure of a company's underlying profitability, shows operating profit as a percentage of sales.
Total revenue doubled to $614 million from $306 million a year ago. The jump came largely from a string of acquisitions, including French fashion house Yves Saint Laurent and Italian shoemaker Sergio Rossi.
Earlier this month, Gucci said it was taking a 51 percent stake in the prêt-à-porter label of British designer Alexander McQueen.
Gucci forecast revenue for the year at $2.2 billion, growing to $2.5 billion in 2001.
Rising prices for shares of luxury goods companies have prompted a slew of stock market flotations by fashion companies. However, listed companies have seen their shares perform less well in recent weeks as investors fretted about the impact of slowing economies.
Gucci shares have underperformed the FTSE Eurotop 100 index by some 10 percent so far this year.
--from staff and wire reports 
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Gucci
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