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INTERNATIONAL. LVMH today revealed a solid set of annual results for 2008, with its Selective Retailing arm (including DFS) posting +5% year-on-year revenue growth (+9% in organic terms) to €4,376 million. Profit from recurring retail operations was €388 million, down -9% in the year.
DFS itself posted a “slight increase” in sales compared to 2007, the group reported. “The slowdown in Japanese tourism was offset by the momentum of other Asian clients,” said LVMH. “DFS benefited from this trend through the opening of the Macao Galleria and the airport concessions at Mumbai and Abu Dhabi. Opening new stores in these destinations requires short-term investment but constitutes an important source of future growth.”
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As a group, LVMH revenues hit €17.2 billion in the year, up by +4% Profit from recurring operations rose by +2% to €3,628 million while group share of net profit was stable compared to 2007 and came to €2,026 million. In the fourth quarter, reported revenue was €5.2 billion, an increase of +4%.
LVMH Chairman and CEO Bernard Arnault said: “The 2008 results demonstrate the exceptional reactivity of our organisation in this period of economic crisis. The Group has always emerged stronger from previous economic downturns thanks to the dynamic innovation of its brands, the quality of its products and the effectiveness of its teams. LVMH approaches the challenges and the opportunities of 2009 with confidence and determination and has set the objective of increasing its leadership position in the worldwide luxury goods sector.”
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Performance by division
Wines & Spirits saw organic revenue growth of +1% in 2008. Profit from recurring operations was €1,060 million. LVMH said: “This performance was achieved thanks to an ongoing policy of price increases consistent with the Group’s value strategy and the high-end positioning of its brands. Regional performances varied: overall trends were positive in Europe but demand was less dynamic in the US and Japan due to market conditions. Emerging markets, such as China, Russia and the Middle East, recorded high growth.
“The year was notable for the acquisitions of the Spanish wine group Numanthia Termes and of the Montaudon champagne house, which enabled the business group to strengthen its Champagne reserves.”
Fashion & Leather Goods recorded +10% organic revenue growth in 2008. Profit from recurring operations was €1,927 million. Louis Vuitton recorded double-digit organic revenue growth in 2008, accompanied by strong profitability.
LVMH said: “[Louis Vuitton] once again showed its powerful creativity with new, highly successful additions to its traditional lines and the success of its new canvas, Damier Graphite. A new, very colourful, collection, inspired by a previous collaboration between Marc Jacobs and Stephen Sprouse, has been a great success at the beginning of this year.
“Fendi performed well, driven by the continued success of the Baguette handbag and its leather goods line Selleria. Donna Karan and Marc Jacobs also proved resilient in the difficult environment at the end of the year.”
Perfumes & Cosmetics registered organic revenue growth of +8% in 2008. Profit from recurring operations reached €290 million. The current operating margin reached 10%.
LVMH said: “Christian Dior continued to win market share. The vitality of its star perfume, J’Adore, and the success of Dior Homme Sport, have contributed to the brand’s strong momentum. Makeup is growing fast and has benefited from the success of the Dior Addict and Diorshow lines.
“The excellent performance of Guerlain was supported by the successful launches of the masculine perfume Guerlain Homme and Le 2 mascara. The principal drivers of Givenchy’s growth were the continued progress of Very Irresistible, the launch of the masculine fragrance Play and the new mascara Phenomen’Eyes. Benefit enjoyed rapid growth in China and confirmed its worldwide success.”
Following the growth seen in the first nine months of the year, Watches & Jewelry saw a slowdown in the last quarter. Profit from recurring operations was €118 million. The group said: “The good performance in Europe and Asia compensated in part for the slowdown in the American and Japanese markets. TAG Heuer continued its worldwide roll-out of the Grand Carrera collections and launched a new range of high-end luxury mobile phones.
“At Montres Dior, automatic models have enhanced the Christal line, while Zenith strengthened its Manufacture Horlogère position. Chaumet strengthened its jewellery lines Liens and Attrape-Moi. Fred confirmed the success of Force 10 and De Beers expanded its network of stores.”
As reported above, Selective Retailing registered organic revenue growth of +9% with DFS posting slight growth in revenues. On Sephora, the group said the brand “continued its strong momentum in 2008 which resulted in market share gains and a continued good level of profitability.
“Revenue growth on a same-store basis was steady. The brand is expanding its presence in key markets and continues the evolution of its existing store network. On-line sales have shown strong growth in France, the US and China.”
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