LVMH first half year profits decline 5 percent, on Japan tax rise
LVMH, the world’s largest luxury-goods company, reported first-half earnings that trailed estimates as the strength of the euro weighed on growth and a Japanese sales-tax increase hurt sales of fashion and leather goods.
Profit from recurring operations fell 5 percent to 2.58 billion euros ($3.5 billion), LVMH said today after European markets closed. Analysts expected 2.76 billion euros, according to the median of 18 estimates compiled by Bloomberg.
April’s 3 percentage-point increase in Japanese value-added tax added to the difficulties of softening demand for expensive liquor and watches. Fashion and leather-goods sales climbed 4 percent in the first half, LVMH said, trailing analysts’ estimates by 2 percentage points.
“The second quarter showed comparable regional trends to the first quarter, except in Japan, which had experienced particularly strong growth during the first quarter,” LVMH said in a statement.
Wines and spirits sales declined 1 percent on an organic basis, dragged down by cognac in China as destocking by distributors continued in the second-quarter, LVMH said. Profit at the unit declined 15 percent, the company said.
Sales of watches and jewelry climbed 3 percent, trailing estimates. Uncertainties linked to the economic climate continue to make multibrand retailers prudent in their purchasing, LVMH said, adding that the performance in its own stores showed “significant” growth. Profit at the unit declined 31 percent, dragged down by currency shifts.