Paris—LVMH Moet Hennessy Louis Vuitton SA, the world’s largest luxurygoods company, today reported a first half profit increase that missed analysts’ estimates but noted it was optimistic about the second half of the year.
For the six months ended June 30, LVMH posted a net profit fall of 6% to 1.58 billion euros (about $2.09 billion).
Profit from recurring operations rose 2% to 2.71 billion euros (about $3.6 billion). Analysts’ average estimate expected 2.76 billion euros.
Revenue in the first half increased 5.6% to 13.70 billion euros, missing analysts’ estimate for 13.73 billion euros. (Sales were up 8% excluding currency shits and acquisitions)
LVMH’s fashion and leathergoods comparable sales rose 5% in the first half, accelerating from a 3% gain in the first quarter. “Profit from recurring operations was at a comparable level to that achieved in first half of 2012,” LVMH said. Its biggest brand, Louis Vuitton, is undergoing a shift to the even higher-end to help improve sales especially in China.
Buys Loro Piana
In the Watches & Jewelry division, recorded organic sales increased 1%. “Profit from recurring operations decreased by 2%. The strategy of moving further upmarket continued with the goal of enhancing the attractiveness of our brands to our customers, LVMH said. “The performance in own stores was excellent thanks to the quality and creativity of our new products as well as the strength of iconic lines, particularly in jewelry. This was offset by restrained purchasing by watch retailers and the voluntary closure of certain multi-brand points of sale, which explain this lower first half growth.”
Last month, LVMH said it would play some 2 billion euros for an 80% stake in Loro Piana SpA, the Italian cashmere company.
“Innovation, extreme quality, strong distribution and savoir-faire in all of our businesses reinforce our Maisons. Loro Piana, with whom we share the same values of family and craftsmanship, will fit harmoniously within this dynamic,” said Bernard Arnault, chairman/ceo. “It is with confidence that we approach the second half of the year and rely on the creativity and quality of our products, as well as the effectiveness of our teams, to pursue further market share gains in our traditional markets as well as in high potential emerging territories.”
Long a bellwether for luxury sales, LVMH has seen several high-end brands business slow from previously booming levels, hit by slower economic growth and changing consumer tastes, most notably in China.