Paris–LVMH Moet Hennessy Louis Vuitton, the world’s largest maker of luxury goods, reported today that its first-half profit that beat market estimates as sales of apparel, leathergoods and other accessories accelerated in the second quarter.
Net income rose 53% to 1.05 billion euros ($1.36 billion). Previously, market analysts had predicted the company would hit 956.2 million euros. Second-quarter sales advanced 22% to 4.63 billion euros.
While LMVH Chairman Bernard Arnault said all business lines contributed to growth–including leathergoods and watches which had been hard hit last year–the approach for rest of the year would be to “focus on cost control into the second half despite the momentum in the markets.”
Market analysts attributed the improved sales to returning demand for luxurygoods in China and Asia and retailers in North America and Europe replenishing inventories that had been slashed after the recession.
Sales Rebound in Leathergoods, Jewelry and Watches
“In the current recovery from the economic crisis, LVMH will continue to gain market share thanks to the numerous product launches planned before the end of the year, to its geographic expansion in promising markets and to its cost management,” the company said in the statement.
First-half revenue increased 16%, or 14% excluding currency swings and acquisitions. Similar to recent reports from other luxurygoods companies, growth in Asia and China accounted for the biggest sales increases although the United States rebounded, too.
On a local currency basis, sales gained 18% in the United States, 21% in Asia and 11% in Europe, the company said at a press conference. Sales rose 27% in China.
The fashion and leathergoods unit, the company’s largest division, posted a sales increase of 18%. Its Louis Vuitton brand reported “very strong” revenue growth of more than 10%, and Fendi, Donna Karan and other fashion brands has a “good start to the year,” the company said.
Watch and jewelry revenue increased 28% but was down from the first-quarter’s 33% spike resulting from stores restocking inventory. Nonetheless, the watch and jewelry division, which includes brands such as TAG Heuer, De Beers and Chaumet, profit increased by an astounding 145%.
Sales of wines and spirits gained 21%, while perfume and cosmetics increased 12%, LVMH said. Revenue at the company’s retail division, which includes Sephora and DFS, rose 14%.
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