Paris—Despite being faced with continued economic slumps in many parts of the world—even a slowdown in the Chinese economy, LVMH, the world’s largest luxurygoods conglomerate, reported Thursday that its 2012 profit grew 12% to $4.6 billion.
“2012 was another remarkable year for LVMH, especially in the context of the economic slowdown in Europe,” said Bernard Arnault, LVMH’s chairman/ceo. “All of our businesses demonstrated excellent momentum driven by innovation and the quality of their products, thereby strengthening their positions in traditional markets while continuing to develop in new ones.”
Net revenue jumped 19% in 2012 to 28.1 billion euros (about $38.1 billion), a figure in line with analysts’ average estimate.
“All business groups saw excellent momentum in Europe, Asia and the United States,” the group added in its earning statement, singling out its Louis Vuitton brand for double-digit growth as well as watch brand TAG Heuer and its newly integrated Bulgari business.
For its fourth quarter, LVMH said sales were up 12% compared to fourth quarter 2011 with organic revenue growth of 8%. Comparable sales at the group’s Fashion & Leathergoods division, which includes Louis Vuitton, came in at 5%, the same as in the third quarter.
Annual sales in its Fashion & Leathergoods division, which includes Louis Vuitton, Marc Jacobs, Givenchy, Donna Karan and Celine, posted a 14% sales increase to 9.93 billion euros (about $13.3 billion). Although the company didn’t break out figures for Louis Vuitton separately, the brand continued to perform exceptionally, boasting 460 stores in some 50 countries.
Limiting New Louis Vuitton Shops
But in a conference with analysts, Arnault said “the group’s strategy now is to limit store openings. We want to focus on leather products with high value added.” That may included more custom, made-to-order styles in exotic skins and exclusive “invitation-only” space in some stores. For example, no Louis Vuitton stores are planned in second and third-tier cities in China to “avoid becoming too commonplace.”
Instead of opening new boutiques, Arnault said Louis Vuitton will expand existing ones and increase personal relationships with customers.
Besides Louis Vuitton, the company cited Fendi as expanding its distribution network and that its iconic baguette handbag had a banner year on its 15th anniversary. And “Celine showed excellent performance in all its products.”
The watches and jewelry division saw a 6% growth in sales last year along with a 26% increase in profit from recurring operations thanks to Bulgari, which it acquired in June 2011.
“LVMH watch brands experienced good momentum supported by innovations and excellent performance of their iconic models Carrera by TAG Heuer, King Power by Hublot and El Primero by Zenith,” the company said. Meanwhile, in jewelry, Bulgari’s Serpenti and B. Zero collections proved successful.
LVMH provided no sales breakdown by region other than to note that in Europe, where many countries have economies on the verge, if not in a recession, there was 7% organic sales growth. Asia continues to be the company’s largest market along with North America.
Arnault sttributed LVMH’s European sales gain to spending by tourists from outside the region.