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“The results of the first half demonstrate LVMH’s excellent resilience, thanks to the strength of its brands and the responsiveness of its organisation in a climate of economic and financial uncertainties.“ |
Bernard Arnault Chairman and CEO LVMH |
INTERNATIONAL. LVMH Moët Hennessy Louis Vuitton’s (LVMH) Selective Retailing Division, which includes DFS Group and Starboard Cruise Services (plus domestic operations Le Bon Marché and Sephora), posted a -3% fall in profits for the first half of 2014 to €398 million. The division’s sales rose by +4% (+9% organic).
LVMH commented: “DFS relies on growth of sales to Asian clientele in a context of a fall in spending by Japanese tourists due to the weakness of the Yen. Major expansion and renovation work at several airport concessions weighed on its profitability.”
Domestic market perfumery chain Sephora continued its growth in all regions, with “particularly remarkable” performance in North America, the Middle East and Asia.
The luxury goods group posted revenue of €14 billion in the first half of 2014, an increase of +3%. Organic revenue growth was up +5% compared to the same period in 2013.
It continued to grow in the US and Asia, while Europe demonstrated resilience despite a still challenging economic environment. With organic growth of +3%, the second quarter showed comparable regional trends to the first quarter, except in Japan, which had experienced particularly strong growth during the first quarter.
Group profit from recurring operations for the first half of 2014 was €2,576 million and current operating margin reached 18%. Negative exchange rate effects weighed strongly on the first half. Group share of net profit amounted to €1,509 million.
LVMH Chairman and CEO Bernard Arnault commented: “The results of the first half demonstrate LVMH’s excellent resilience, thanks to the strength of its brands and the responsiveness of its organisation in a climate of economic and financial uncertainties. The first half of the year also witnessed the smooth integration of Loro Piana into the group.
“Following the first half’s good resilience, it is with confidence that we approach the second half of the year and rely on the creativity and quality of our products, and the effectiveness of our teams, to pursue further market share gains in our traditional markets, as well as in high potential emerging territories.”
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First-half performance by business group
Also in the Selective Retailing division, beauty chain Sephora continues its growth in all regions, with “particularly remarkable” performance in North America, the Middle East and Asia. The brand continues to strengthen its position in key markets. Online sales grew significantly, helped by a strengthened mobile offering. Sephora is proceeding with the expansion of its store network and has just opened its first flagship store in Indonesia.
The Wines & Spirits business group recorded a decrease in organic revenue of -1% in the first half of 2014. Profit from recurring operations stood at €461 million. This trend essentially reflects the performance of Cognac in China, linked to destocking by distributors, which continued in the second quarter. The Champagne business, with its fast growing prestige vintages, experienced a good start to the year.
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DFS was the world’s leading travel retailer (duty free and duty paid) by turnover in 2013 according to The Moodie Report’s just-published ranking of the world’s top 25 travel retailers |
Fashion & Leather Goods recorded organic revenue growth of +4% in the first half of 2014. Profit from recurring operations was €1,487 million, stable in comparison to the same period of 2013, due to a strongly adverse exchange rate effect.
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This division continued to benefit from gains made by Louis Vuitton, which continues its strong creative momentum with new artistic director, Nicolas Ghesquière, and where profitability remains at “an exceptional level”. Loro Piana experienced “an excellent start” to the year, and the innovations in leather goods are seeing “strong success”, LVMH said.
Fendi benefited from the focus on its iconic bags, for which sales progressed strongly. Céline’s growth continues to be driven by the success of its leather goods and the rapid development of footwear. Several Céline flagship stores were opened around the world, particularly in London, Tokyo and Paris. Other brands, such as Givenchy, Berluti and Kenzo, continued to strengthen their positions.
The Perfumes & Cosmetics business group recorded organic revenue growth of +6%. Profit from recurring operations stood at €204 million. Parfums Christian Dior continued to benefit from the growth of its iconic perfumes J’Adore and Dior Homme. The make-up segment also experienced sustained growth. Guerlain continues its progress with the ongoing success of La Petite Robe Noire and the rapid development of Orchidée Impériale and Abeille Royale. Benefit, Make Up For Ever and Fresh confirmed their excellent performance, the group added.
In the first half of 2014, the Watches & Jewelry business group recorded organic revenue growth of +3%. The uncertainties linked to the economic environment continue to make multi-brand retailers prudent in their purchasing. The performance in the brands’ own boutiques exhibited significant growth. Bulgari benefited from positive momentum in jewellery, while TAG Heuer focused on the development of its iconic lines.
Despite an uncertain European economic environment, LVMH said it will continue to gain market share thanks to the numerous product launches planned before the end of the year and its geographic expansion in promising markets, while continuing to manage costs.
“Our strategy of focusing on quality across all our activities, combined with the dynamism and unparalleled creativity of our teams, will enable us to reinforce, once again in 2014, LVMH’s global leadership position in luxury goods,” the group stated.
