A Celebration of Jewelry and the Business Behind the Beauty
Leibish & Co
Thursday, July 29, 2010
LVMH First-Half Sales Up 16%; Net Profits Up 53%
It appears that worldwide luxury spending is making a comeback as LVMH Moët Hennessey Louis Vuitton reported revenue of €9.1 billion ($12 billion) in the first half of 2010, an increase of 16 percent. All business groups achieved double-digit organic revenue growth. The Group performed particularly well in Asia, the United States and Europe.
In addition, the world’s leading luxury products group reported that profits from recurring operations for the period increased by 33 percent to €1.8 billion and Group share of net profit increased by 53 percent to €1.05 billion ($1.37).
“The 2010 first half results, once again, demonstrate the exceptional appeal of our brands as well as the effectiveness of our strategy, as pertinent in the context of a recovery in 2010 as it was during the global economic crisis in 2009,” said Bernard Arnault, LVMH chairman and CEO. “All LVMH’s business groups contributed to this excellent half year. Operating margin has improved considerably thanks to robust revenue growth and the control over operating costs. This focus on cost control will continue into the second half of the year despite the momentum in the markets. The Group approaches the end of the year with confidence and is relying upon the creativity and quality of its products as well as the effectiveness of its teams to pursue further market share gains in its historical markets as well as in high potential emerging markets.”
The Watches & Jewelry business group registered revenue growth of 28 percent and a 145 percent increase in profit from recurring operations, the company said. The increase in purchases by retailers, coupled with the rise in consumer demand, contributed to the strong performance. TAG Heuer celebrated its 150th anniversary and grew strongly in China and the United States. Hublot’s King Power line was well received and the recent integration of the "Confrérie Horlogère" team has strengthened the brand’s expertise. Zenith benefited from the success of its new models. Fred, Chaumet and De Beers enjoyed momentum in their networks of stores. The launch of the Josephine collection was one of the highlights of the period for Chaumet.
Following considerable destocking in 2009, the Wines & Spirits business group recorded revenue growth of 21 percent and an increase of 35 percent in profit from recurring operations, the company said. Champagne sales saw a significant rebound during the period thanks to improvements at prestige brands, which had been adversely affected in 2009. In the Cognac business, Hennessy experienced strong momentum in its key markets, notably China and the United States. All qualities of cognac achieved strong growth.
The Fashion & Leather Goods business group recorded revenue growth of 18 percent in the first half of 2010. Profit from recurring operations increased by 28 percent to €1.2 billion ($1.5). Louis Vuitton registered very strong revenue growth. Asian and European markets confirmed their growth momentum and the United States, which showed good resilience in 2009, continued to improve during the period. Fendi, Donna Karan and the other fashion brands had a good start to the year.
The Perfumes & Cosmetics business group registered revenue growth of 12 percent, and a 50 percent increase in profit from recurring operations, the company said. LVMH’s brands benefited from strong growth in Asian markets and a return of demand in Europe as well as in the United States. By accelerating the development of its star lines, Christian Dior achieved strong growth and gained market share. Beyond the global success of J’Adore, the first half was notable for the progress of Miss Dior Chérie and Eau Sauvage, the leading French male fragrance. In make-up, the new foundation, Diorskin Nude, and the lipstick, Rouge Dior were successful. Guerlain benefited from the 2009 launch of its Idylle perfume and from the growth of Orchidée Impériale. The ongoing success of Ange ou Démon and its major classics were the key highlights for Parfums Givenchy. Benefit and Make Up For Ever enjoyed strong growth.
The Selective Distribution business group saw a 14 percent increase in revenue and recorded growth of 36 percent in profit from recurring operations. DFS benefited from the growth in Asian tourism and saw a considerable increase in revenue. The renovation of the Hong Kong’s Sun Plaza Galleria continued. Macao has seen strong growth and will benefit in the second half of the year from the full opening of the City of Dreams. Sephora performed exceptionally well and strengthened its position in all of its markets. It sustained its growth momentum on a comparable store basis and online sales have continued to grow rapidly. The brand expanded its presence in all markets, and is ready to develop in South America through the acquisition of Sack’s, the leading Brazilian online specialty beauty retailer.
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I am a freelance writer and editor who covers the luxury jewelry and watch industry for several publications, including Forbes.com the Financial Times, Hong Kong-based JewelleryNetAsiaand the Italian jewelry magazine, VO+. In addition, I have my own blog covering the jewelry and watch industry, Jewelry News Network.