LVMH's luxury sales stand up despite slowdown
off the US downturn reporting an upsurge in sales over the second
half of the year.
The France-based owner of Christian Dior perfumes posted an 8 per cent increase in sales for 2007 to $16.5bn beating the 6 per cent increase recorded for the first six months of the year. Gathering economic clouds also failed to put a dampener on LVMH's profits as operating margins increased 22 per cent and profit from recurring operations rose 12 per cent to $3.5bn. Beauty businesses The perfumes and cosmetics division was a strong performer for the company with sales increasing 8 per cent to $2.7bn and profit from recurring operations growing 15 per cent to $256m. The relative strength of the Euro took the edge of the financial performance of the division as organic sales growth was noticeably higher at 12 per cent. In the perfume and cosmetics stable Christian Dior led the stud with J'Adore running well alongside newcomers Midnight Poison and Fahrenheit 32. The development of the Capture skin care range and the Rouge Dior make-up line also contributed to a successful year for the brand. Meanwhile, highlights for the Guerlain business included the release of the perfume L'Instant Magic, the growth of the Terracotta make-up line and the international launch of Ange ou Demon. In the coming year LVMH plans to concentrate on the growth of its existing brands and has quashed rumours that it is interested in buying fellow luxury cosmetics firm Clarins. In a presentation to investors on financial results LVMH's CEO Bernard Arnault said the company had no specific acquisition targets. Macro backdrop However, Arnaud went on to say that the current economic climate is likely to produce a number of casualties in the luxury market and could therefore leave LVMH with buying opportunities. He insisted that LVMH itself was well insulated from the economic gloom and said a mild US recession would have at most a limited impact on its financial performance. "In an economic environment unsettled since the beginning of the year, we will rely on the strength of our growth model, the exceptional innovation of our brands and the talent of our teams to make 2008 another year for growth," said Arnault in a statement.
