LVMH posts strong first half; retail division records healthy growth
Source: ©The Moodie Report
By Mary Jane Pittilla, Brands Editor
FRANCE. LVMH Moët Hennessy Louis Vuitton, the world’s leading luxury products group, recorded revenue of €9.1 billion in the first half of 2010, up +16%, boosted by double-digit organic revenue growth in all business units.
The group said it performed particularly well in Asia, the US and Europe.
The Selective Distribution division, which includes leading travel retailer DFS, saw a +14% upswing in first-half revenue and recorded growth of +36% in profit from recurring operations.
The company said DFS benefited from the growth in Asian tourism and saw a considerable increase in revenue. The renovation of the Hong Kong’s Sun Plaza Galleria continued, while Macao had seen strong growth and will benefit in the second half of the year from the full opening of the City of Dreams.
In the first half of 2010, profit from recurring operations surged by +33% to €1,816 million. Group share of net profit jumped by +53% to €1,050 million.
Commenting on the results, LVMH Chairman and CEO Bernard Arnault said: “The 2010 first-half results demonstrate, once again, the exceptional appeal of our brands as well as the effectiveness of our strategy, as pertinent in the context of a recovery in 2010 as it was during the global economic crisis in 2009. All LVMH’s business groups contributed to this excellent half year.
"Operating margin has improved considerably thanks to robust revenue growth and the control over operating costs. This focus on cost control will continue into the second half of the year despite the momentum in the markets. The group approaches the end of the year with confidence and is relying upon the creativity and quality of its products as well as the effectiveness of its teams to pursue further market share gains in its historical markets as well as in high potential emerging markets.”
Highlights of the first half of 2010 include:
• Double-digit organic revenue growth in all business groups;
• Market share gains of all our brands notably with double-digit revenue growth at Louis Vuitton, whose profitability continues to be at an "exceptional" level;
• Strong revenue growth in emerging markets;
• A record level of first-half current operating margin;
• Robust rebound in orders from distributors of wines and spirits and watches and jewellery;
• Rapid progress and market share gains at Christian Dior and Sephora;
• Solid financial position with a net debt ratio under 20%.
Wines & Spirits: increase in orders
Following considerable destocking in 2009, the Wines & Spirits business group recorded revenue growth of +21% and an increase of +35% in profit from recurring operations.
Champagne sales saw a significant rebound during the period thanks to improvements at prestige brands, which had been affected in 2009. In the Cognac business Hennessy experienced strong momentum in its key markets, notably China and the US. All qualities of Cognac achieved strong growth.
Fashion & Leather Goods: "exceptional momentum" at Louis Vuitton
The Fashion & Leather Goods business group recorded revenue growth of +18% in the first half of 2010. Profit from recurring operations climbed by +28% to €1,179 million. Louis Vuitton registered "very strong" revenue growth, which is particularly remarkable considering its already strong first half of 2009, LVMH said.
Asian and European markets confirmed their growth momentum and the US, which showed good resilience in 2009, continued to improve during the period.
"Louis Vuitton continues to rely on its incomparable creativity and the fact that it is the only luxury brand in the world to sell its products exclusively through its own store network," it reported.
Fendi, Donna Karan and the other fashion brands had a good start to the year.
Perfumes & Cosmetics: success of iconic fragrances
In the first half the Perfumes & Cosmetics business group registered revenue growth of +12%, and a +50% jump in profit from recurring operations. LVMH’s brands benefited from strong growth in Asian markets and a return of demand in Europe as well as in the US. By accelerating the development of its star lines, Christian Dior achieved strong growth and gained market share.
Beyond the global success of J’Adore, the first half was notable for the progress of Miss Dior Chérie and Eau Sauvage, the leading French male fragrance. In make-up, the new foundation, Diorskin Nude, and the lipstick, Rouge Dior were a major success.
Guerlain benefited from the 2009 launch of its Idylle perfume and from the growth of Orchidée Impériale which is proving to be an exceptional product, the company said. The ongoing success of Ange ou Démon and the brand's major classics were the key highlights for Parfums Givenchy. Benefit and Make Up For Ever enjoyed particularly strong growth.
Watches & Jewelry: strong recovery
In the first half, the Watches & Jewelry business group registered revenue growth of +28% and a +145% surge in profit from recurring operations. The increase in purchases by retailers, coupled with the rise in consumer demand, contributed to the performance of the brands. TAG Heuer celebrated its 150th anniversary and grew strongly in China and the US.
At Hublot, the King Power watch line was well received and the recent integration of the "Confrérie Horlogère" team has strengthened the brand’s expertise. Zenith benefited from the success of its new models.
Fred, Chaumet and De Beers enjoyed momentum in their networks of stores. The launch of the Josephine collection was one of the highlights of the period for Chaumet.
Selective Distribution: DFS benefits from Asian tourism growth
In the first half, the Selective Distribution business group saw a +14% upswing in revenue and recorded growth of +36% in profit from recurring operations.
DFS benefited from the growth in Asian tourism and saw a considerable increase in revenue. The renovation of the Hong Kong’s Sun Plaza Galleria continued. Macao has seen strong growth and will benefit in the second half of the year from the full opening of the City of Dreams.
Sephora performed "exceptionally well" and strengthened its position in all of its markets. It sustained its growth momentum on a comparable store basis and online sales have continued to grow rapidly. The brand expanded its presence in all markets, and is ready to develop in South America through the acquisition of Sack’s, the leading Brazilian online speciality beauty retailer.
In the current recovery from the economic crisis, LVMH will continue to gain market share thanks to the numerous product launches planned before the end of the year, to its geographic expansion in promising markets and to its cost management, the group said.
"Our strategy of focusing on quality across our entire product range, combined with the dynamism and unparalleled creativity of our teams, will enable us to reinforce, once again in 2010, LVMH’s global leadership position in luxury products," it concluded.