LVMH 2013 Profit Edges Up as Sales Slow

In What's New, Industry News by Jeff Prine

From Louis Vuitton's cruise collection

From Louis Vuitton’s cruise collection

Paris—LVMH, the world’s largest luxurygoods conglomerate, today said its 2013 profit only edged up 0.4% as sales growth slipped to 4% from 19% in the previous year.

The parent of Louis Vuitton, Bulgari, Givenchy and TAG Heuer posted net income of 3.44 billion euros (about $4.7 billion) in 2013 compared with 3.42 billion euros in 2012.

Total 2013 revenue advanced to 29.15 billion euros, in line with analysts’ estimate for 29.4 billion euros. Sales rose 8% on an organic basis, matching estimates.

Growth ‘Is Still Good’

The company said profit from sales of watches and jewelry, fashion and leathergoods was about float with 2012 while revenue was lower year-on-year sales despite a rebound in the fourth quarter.

“2013 saw another excellent performance from LVMH despite exchange rate volatility and slower growth in the European markets,” said Bernard Arnault, chairman/ceo. “Profit from recurring operations exceeded 6 billion euros for the first time…All our brands have proven to be exceptionally dynamic.”

Arnault speculated that sales may have slowed due to consumers in emerging markets buckling down on their spending and the fact that Louis Vuitton, its largest brand, has taken a strategy of going higher-end on more exclusive products.

“You’re going to say that usually growth is faster, why is it only 8%, which is still good,” Arnault said at the news conference.

In the fashion and leathergoods group, organic revenue rose 5% while profit from recurring operations decreased 4% to 3.14 billion euros.

“Over the year, Louis Vuitton maintained its exceptional level of profitability while continuing its quest for excellence with regard to its products as well as its distribution,” the company stated. “Among the year’s innovations, the Capucines model in leather and the W bag, which revisits the iconic Monogram canvas, both achieved great success. Creative momentum at Louis Vuitton was maintained with the arrival of Nicolas Ghesquière as artistic director for its women’s collections, following the move of Marc Jacobs to focus on his eponymous brand.”

Fendi continued to focus on higher-end product and “qualitative expansion” of its distribution network.

“Céline recorded a remarkable performance, reaching a new record in its sales. Other fashion brands such as Kenzo, Berluti and Givenchy continued to strengthen as they harness their creative flair,” the company said.

The watch & jewelry group posted a 4% increase in organic revenue while profit from recurring operations rose 12%. In particular, brands’ directly owned stores continued to strengthen the company said.

No Potential Acquisitions Being  Considered

“The LVMH watch brands continued to invest in innovation and development of industrial capacity, such as the new TAG Heuer movement manufacturing facility.” Bulgari reported success with the Serpenti collection and the new high-end Diva jewelry collection. “Presence in multi-brand stores continues to be more selective,” LVMH noted.

At the Selective Retailing group, which includes DFS, organic revenue was up 17. Profit from recurring operations increased by 6%.

LVMH said its perfumes & cosmetics group “outperformed the market by recording organic revenue growth of 7%. Profit from recurring operations increased by 2%.”

And in the wines & spirits group, organic sales rose 6% and profit from recurring operations was up 9% “in an environment marked by good momentum in Asia and the United States.”

As for what 2014 has in store, LVMH was optimistic. “Despite an uncertain economic environment in Europe, LVMH is well-equipped to continue its growth momentum across all business groups in 2014.”

Arnault said LVMH isn’t considering any potential acquisitions now.

“There is nothing concrete being studied at the moment,” Arnault said during today’s group’s results presentation.




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