LVMH surprises markets with 12% increase in sales
The French luxury goods empire LVMH (Moët Hennessy Louis Vuitton) last week posted a better-than-expected 12% increase in sales for the first half of 2001, with the biggest gains being recorded in its fashion and leather goods division where revenue increased by 18% to $1.75 billion.
Welcome though they were, the increases were far less than those attained in the first six months of last year when the fashion and leather goods division, the largest Gucci division, boosted sales by a record 40%.
Analysts had been predicting group sales to be 10% to 11% up year-on-year, citing the impact of the global economic slowdown on the company’s main markets of the USA and Japan. However, consistent growth in the fashion and leather goods and perfumes divisions meant the group was still able achieve a creditable 12% increase, to $4.75 billion. But for production constraints, the 10% rise in sales recorded in Louis Vuitton handbags and luggage would have been greater. Even sales of the much smaller Loewe leather goods brand showed improvement.
With the news, LVMH shares climbed 7.5%, partly offsetting the 11% slide of the previous week brought about by rumours of a profiting warning, and the decision in June by arch rival Gucci to cut its earnings forecast. LVHM said that operating results for the first six months, to be announced this September, were likely to be ’significantly weaker’ than those attained last year.
