LVMH Half Year Results Beat Forcasts

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Paris—LVMH reported Tuesday that its first half sales jumped 13% as demand for its luxurygoods surged especially in Asia.

For the half year ended June 30, LVMH, which is the world’s largest luxurygoods company by revenue, saw sales increase 13% to 10.29 billion euros (about $14.9 billion). Second quarter sales rose 9% to 5.05 billion euros. On a local currency basis, first-half sales gained 26% in Asia, 17% in the United States, (excluding Hawaii) and 8% in Europe, the company said in a presentation. Revenue fell 6% in Japan.

Half Year Net Income Rises 25%

Net income also climbed, rising 25% to 1.31 billion euros (about $1.9 billion), beating analysts’ average estimates surveyed by Bloomberg for a profit of 1.25 billion euros.

Calling the half year results “remarkable,” Bernard Arnault, LVMH’s chairman, said, “LVMH’s excellent performance in the first half once again demonstrates the exceptional appeal of our brands, the attraction of our high-quality artisanal products and the pertinence of our strategy.”

Moreover, first-half profits from continuing operations at the luxurygoods conglomerate, jumped 22% to 2.22 billion euros The current operating margin reached 22%, a record for the period, LVMH said.

While LVMH didn’t provide any specific projections for the second half, Arnault said, “We approach the second half of the year with confidence and are relying upon the creativity and quality of our products as well as the effectiveness of our teams to pursue further market-share gains.”

By division, LVMH’s fashion and leathergoods had a 13% increase to €3.97 billion for the half year. Noting that its flagship brand “Louis Vuitton continued to register exceptional performance,” LVMH said all its business lines contributed to this momentum, with many having waiting lists. Notably, Fendi and Donna Karan continued sustained growth in their revenue and profit and Céline, in particular, generated “extraordinary demand.”

In its watch and jewelry division, revenue grew 27% and profit from continuing operations increased by 73%. The company cited TAG Heuer as growing significantly to the new 1887 calibre movement and women’s Formula 1 collections. Hublot, Dior and Zenith also saw increased demand for new products. Chaumet, Fred and De Beers LV achieved good performances in their own store networks, too.

76.1% Stake in Bulgari

During the period, LVMH which owns 60 brands including Marc Jacobs, Givenchy and Christian Dior, acquired a 76.1% stake in Italian jeweler Bulgari and will probably make a tender offer for the remaining shares at the end of August. The deal should close in late September.

On the subject of its stake in Hermès, which is unwelcome to that luxury house’s majority shareholders, LVMH also revealed it now owned 21.4% of Hermès, up from 20.21% in December. LVMH said in June it has no intention of making a takeover bid for  Hermès,

First-half sales of wines and spirits gained 13%, while perfume and cosmetics advanced 11%, LVMH said. Revenue at the selective retailing unit, which includes Sephora and DFS, rose 18%.

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