LVMH Hits New Heights as 2014 Profit Rises 64%

In What's New, Industry News by Jeff Prine

Photographer Bruce Weber shot actress Jennifer Connelly for the Louis Vuitton SERIES 2 Spring 2015 campaign.

Photographer Bruce Weber shot actress Jennifer Connelly for the Louis Vuitton SERIES 2 Spring 2015 campaign.

Paris—LVMH enjoyed a record high in shares today after reporting Tuesday that its luxurygoods sales were higher than expected last year.

Pointing to a successful rejuvenation of its flagship Louis Vuitton brand, Chairman/CEO Bernard Arnault credited designer Nicolas Ghesquiere with revitalizing the line, which accounts for more than 7.5 billion euros in sales and half of LVMH’s profits.

Analysts also credited Arnault with his efforts to reinvent Louis Vuitton. Ghesquière rejuvenated Louis Vuitton by creating a new logo, a golden V embossed on belts, dresses and handbags. He produced original models of handbags, many with complex woolen patterns, in limited editions and costing more than 20,000 euros.

“Nurtured well with product launches, the monogram has resumed with growth,” said Melanie Flouquet, luxurygoods analyst at JP Morgan Cazenove. “It is a key brand differentiator in a product category, handbags, that had gone too consensual, in our view, across most brands with plain colored leather offers. The logo is dead, long live the logo.”

U.S. Business Strong

Shares of LVMH rose more than 7%, valuing the luxurygoods conglomerate at about 77.2 billion euros (about $88.5 billion.)

Net profit rose to 5.65 billion euros (about $6.5 billion) last year, up 64% from 3.4 billion euros in 2013. The company also benefited from a 2.81-billion-euro capital gain through its selloff of its contested 23% share in Hermès in December.

Its core earnings fell 5% to 5.7 billion euros in 2014, after its high-end wines and spirits suffered from slower cognac sales in China.

Its fashion and leather division, its biggest in terms of sales, posted a comparable sales rise of 4% percent in the fourth quarter, up from 2% growth in the previous three months.

Overall, LVMH posted comp fourth quarter sales growth of 5%, beating analysts’ expectations of 2% to 3% percent growth.

LVMH also said it received a boost from the United States which was its strongest region in the fourth quarter for growth in cognac and fashion sales, helping compensate for weakness in China, and Hong Kong.

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