Dynamic DFS drives momentum for LVMH Selective Retailing
Source: ©The Moodie Report
By Martin Moodie
"2011 was another great vintage for LVMH"
Chairman and CEO
LVMH Moët Hennessy Louis Vuitton
DFS turned in an outstanding performance as LVMH Moët Hennessy Louis Vuitton's (LVMH) Selective Retailing business group recorded organic revenue growth of +19% in 2011. Profit from recurring operations increased by an impressive +34%.
LVMH noted that DFS’s excellent performance benefited from continued growth in Asian tourism [underpinned by tremendous growth in Chinese traffic and customers -Ed]. It said: “The Gallerias in Hong Kong and in Macao recorded remarkable growth while North America and the Pacific zone also strengthened.
“DFS’s renovation program and the expansion of its leading stores – the principal pillars for the brand’s high-end quality offer strategy – continued throughout the year.”
The performance is all the more remarkable given the downturn in Japanese traffic - the long-time linchpin of DFS's business - following the earthquake and tsunami disasters of early 2011.
LVMH, the world’s leading luxury products group, recorded a +16% increase in revenue reaching €23.7 billion in 2011. This includes the integration of Bvlgari as of 30 June 2011. Organic revenue growth was +14%. All business groups saw excellent momentum in Europe, Asia and the US, the company reported. Louis Vuitton, in particular, once again recorded double-digit revenue growth during the year.
Revenue increased by +20% in the fourth quarter with organic growth of +12%. This performance, said LVMH, is in line with the favourable trends observed since the beginning of the year, and compares to the fourth quarter of 2010 which also grew.
Profit from recurring operations increased by +22% to €5,263 million, “a performance which is even more remarkable when compared to the strong growth recorded in 2010”, LVMH commented. Current operating margin continued to improve, reaching 22% in 2011.
Group share of net profit was €3,065 million, an increase of +1% compared to 2010 which included a non-recurrent financial gain. Excluding this gain, the growth in Group share of net profit would have been +34%.
Bernard Arnault, Chairman and CEO of LVMH, said: “2011 was another great vintage for LVMH, highlighting once again the power of our brands, the excellence of our craftsmanship and the appeal of our products.
“Our businesses enjoyed excellent momentum and profit from recurring operations passed the threshold of €5 billion for the first time. The agreement with the Bvlgari family was one of the key moments of the year. In 2012, LVMH intends to further strengthen its global leadership position in high quality products by relying on its sound, long- term strategy.”
"EXCELLENT OUTLOOOK FOR 2012"
Group results; Source: LVMH
In a bullish view of 2012, LVMH said: "After an exceptional 2011, and despite an uncertain economic environment in Europe, LVMH is well-equipped to continue its growth momentum across all business groups in 2012.
"Its strategy will remain focused on developing brands through strong innovation, quality and expansion in high-potential markets.
"Driven by the agility of its organisation, the balance of its different businesses and geographic diversity, LVMH enters 2012 with confidence and has, once again, set an objective of increasing its global leadership position in luxury goods."
OTHER DIVISION HIGHLIGHTS
In Selective Retailing
, besides the DFS performance mentioned earlier, domestic market perfumery chain Sephora recorded "solid" revenue growth and increased market share across all its regions, LVMH said.
"Alongside the selective expansion of its network, numerous store renovations accompanied the increase in the brand’s development."
Growth for Sephora continued, notably in Russia where it increased its shareholding in the Ile de Beauté chain to 65%. The brand opened in two new countries in 2011: Malaysia and Mexico.
The Wines & Spirits
division confirmed return in demand and improved product mix, posting organic revenue growth of +10% in 2011. Profit from recurring operations increased by +18%. Having maintained a strategy of value during the "difficult period" in 2009, the Champagne business fully benefited from the return in demand, LVMH noted.
The improvement in product mix and a firm policy of price increases also contributed to excellent results, it said. Sparkling and still wines developed by Estates & Wines achieved strong growth in key markets. Hennessy Cognac continued its strong momentum, led notably by high-end qualities in Asia. Glenmorangie and Belvedere recorded sustained growth in volumes.
Fashion & Leather Goods
saw “exceptional momentum” at Louis Vuitton and the other brands. The division recorded organic revenue growth of +16%. Profit from recurring operations increased by +20%.
Louis Vuitton, which had another record year, further increased its lead over other luxury brands, LVMH claimed. All of Fendi’s product categories delivered “excellent” performances, the company noted, highlighted by the star line Peekaboo. Donna Karan grew in the US. Celine, Loewe and Givenchy showed “remarkable momentum”.
Perfumes & Cosmetics
was highlighted by the continued success of star lines, LVMH reported. The sector recorded organic revenue growth of +9%. Profit from recurring operations on a comparable structure basis increased by+ 8% in the context of sustained commercial investments.
LVMH said: “All of the brands played a part in the strong momentum of the Asian and American markets. Europe, despite the uncertain environment at the end of the year, also contributed to their growth.
“Parfums Christian Dior successfully adhered to its values of creativity and high quality, and confirmed its good momentum, supported by its recent innovations and the strength of its star lines. J’adore was once again the leading female perfume in France in 2011. Guerlain continued its development in its key markets and benefited from the force of its emblematic perfume, Shalimar.
“At Parfums Givenchy, the new women’s fragrance Dahlia Noir, launched in the second half of the year, enjoyed a promising start. Benefit and Make Up For Ever continued their strong growth across all their markets.”
Watches & Jewellery: market share gains
. This business group recorded organic revenue growth of +23% while profit from recurring operations doubled as a result of the +41% increase in results on a comparable structure basis and the integration of Bvlgari, consolidated from 30 June 2011.
The LVMH brands continued their sustained growth across all geographies, the company said. TAG Heuer “made a splash” with the launch of two products developed and manufactured by its own workshop: the Micrograph 100 and the Mikrotimer Flying 1000.
Hublot continued its innovations with the launch of Masterpieces, the new watch collection of Grandes Complications, and extended its store network. Zenith benefited from the renewal of its lines.
Bvlgari posted an “excellent performance across all categories” said the company. The collections, which were developed around the theme Serpenti, a symbol for the Maison since the 1950s, were very well received.
Driven by the strong momentum at their store networks, the other jewellery brands – Chaumet, De Beers and Fred – continued to develop their star collections, the company concluded.