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LVMH profit rise signals recovery of luxury
News 28 July 2010
Leading luxury group LVMH Moet Hennessy Louis Vuitton reported this week a 53% rise in first-half profit, signalling a strong return of luxury consumption and, in a break from previous cautiousness, expressed some confidence about the rest of the year.
The world's largest luxury-goods company posted net profit of €1.05 billion, up from €687 million a year earlier, on strong revenue growth across all the company divisions and brands.
Revenue for the six months to June 30 was €9.1 billion, up 17% from €7.8 billion a year earlier and ahead of analyst expectations of €8.85 billion. All divisions, from perfume to wine, posted double-digit sales growth with the highest increase coming from watches and jewelry, up 28% to €443 million. LVMH said there was a strong recovery in orders. The business was one of the hardest hit in the sector as retailers dramatically cut back on orders during the crisis.
The fashion and leather-goods division, which houses the company's star brand and one of the industry's strongest performers throughout the crisis, Louis Vuitton, posted 18% growth to €3.52 billion. Luxury consumers took refuge in more classic leather accessories, preferring staid brands to the trendy handbags of the boom years.
Still, the company declined to give full-year guidance. "Thanks to the crisis we don't give previsions anymore," LVMH Chairman and Chief Executive Bernard Arnault said Tuesday. Mr. Arnault and other luxury executives have been wary in calling a recovery. Mr. Arnault declined to give details of the company's future acquisition plans, except to say he isn't interested in buying the French cosmetics giant L'Oreal SA.