LVMH reports strong growth despite economic uncertainty

By Katie Bird

- Last updated on GMT

Related tags: Cent increase, Lvmh

LVMH Moët Hennessey Louis Vuitton has recorded a strong first half of the year suggesting the luxury industry still holds promise despite the struggling economy.

The luxury goods group has reported €7.8bn sales revenue from the first 6 months of 2008, a 5 per cent increase compared to the same period last year. This figure was depressed by unfavourable currency movements as growth at constant exchange rates was significantly higher at 12 per cent.

Operating profit for the group as a whole increased eight per cent from €1.4bn to €1.5bn and the current operating margin now stands at 20 per cent.

According to the company, this performance in an increasingly difficult environment points to the strength of the company's brands.

Commenting on the half year figures CEO Bernard Arnault said: "The first half results once again demonstrate the exceptional appeal of our brands as well as the effectiveness of our strategy, particularly remarkable given the adverse currency and economic environment seen during the period."

Perfume and cosmetics lead the way

It was the company's perfume and cosmetics sector that led the growth reporting an 8 per cent increase in sales revenue to reach €1.36bn, 13 per cent in organic growth terms.

Profit from recurring operations soared for the division with first half 2008 coming in 22 per cent higher than first half 2007.

Dior Parfums was a particularly strong performer in the category experiencing continuing success in the major lines such as J'Adore and Miss Dior Cherie.

In addition, the makeup line for both Dior and Guerlain were both highlighted by the company for their strong performance.

The second half of 2008 will be particularly launch heavy including a number of new men's fragrances.

Jude Law is the face of the new Dior Homme Sport and Justin Timberlake has been chosen for the Play fragrance under the Givenchy brand. In addition a new male fragrance Kenzo Power will also be gracing the shelves later this year.

New product launches will be added across the group's divisions and along with geographical expansion will be driving growth in the second half of the year, according to the company.

Not all luxury players are thriving

These results starkly contrast those of fellow France-based luxury retailer Clarins who reported weak sales from the first half.

The company blamed unfavourable exchange rates and challenging market conditions for the weak results and for Clarins it was the perfume division that took the biggest hit.

On the back of the disappointing first half the company was forced to reduce its targets for the full year to the lower end of its 4-6 per cent range.

Related topics: Business & Financial

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