LVMH achieves record result, with profit up 21 per cent
Excluding the closure of the unprofitable Hong Kong airport duty-free business in December 2017, the group’s organic growth was 12 per cent. Every business division delivered what the company described as “excellent performances”.
Group profit rose a staggering 21 per cent to $16.65 billion (€10 billion) with operating margin reaching 21.4 per cent, an increase of 1.9 percentage points.
“LVMH had another record year, both in terms of revenue and results,” said chairman and CEO Bernard Arnault. “The desirability of our brands, the creativity and quality of our products, the unique experience offered to our customers, and the talent and the commitment of our teams are the group’s strengths and have once again made the difference.”
Arnault said this year the company would continue to innovate and target investments combining tradition and modernity.
“In an environment that remains uncertain, we can count on the appeal of our brands and the agility of our teams to strengthen, once again, our leadership in the universe of high-quality products.”
The company’s flagship Louis Vuitton business was a standout for the group, contributing much of the 15 per cent organic sales growth of the fashion and leather goods business division where profit from recurring operations was up 21 per cent.
“Christian Dior had an excellent first full year within LVMH thanks to the creativity of Maria Grazia Chiuri for the women’s collections and to the arrival of Kim Jones, the new artistic director of Dior Homme,” the company said in its earnings statement.
“Fendi and Loro Piana continued to assert their know-how throughout their collections. Celine entered a new and ambitious stage of its development with the arrival of Hedi Slimane as artistic, creative and image director of the brand.”
Givenchy, Loewe and Kenzo “progressed well” while the other brands, Berluti and Rimowa continued to gain momentum.
Watches and jewellery profit soars
LVMH’s watches and jewellery business recorded organic revenue growth of 12 per cent – and a stunning 37 per cent increase in profit from recurring operations.
“Bulgari performed very well and gained market share. Its iconic jewellery and watchmaking lines Serpenti, Diva’s Dream, B.Zero1, Lvcea and Octo grew strongly.”
Chaumet’s growth was driven by the success of the Liens and Joséphine collections, particularly in Asia.
In the watchmaking sector, Tag Heuer continued to expand its range and Hublot enjoyed strong growth, partly due to high visibility as the FIFA World Cup official timekeeper.
DFS returns to profit
A return to profitability for the travel-retail business DFS after it exited its Hong Kong airport concessions at the end of 2017 was a highlight of LVMH’s ‘selective retailing’ business unit last year. The business group achieved a 12 per cent improvement in organic revenue growth (excluding the airport business from the 2017 base comparison) and a 29 per cent improvement in profit.
“DFS progressed strongly thanks to a particularly good performance in Hong Kong and Macau. The recently opened Gallerias in Cambodia and Italy also grew rapidly,” said LVMH.
Sephora enjoyed unspecified growth in sales and market share, with strong online sales growth in Asia and North America. About 100 new stores opened worldwide, including the new Nanjing Road store in Shanghai and the first Sephora-branded stores in Russia.
Scents of success
The perfumes and cosmetics business division achieved organic revenue growth of 14 per cent, driven by the performance of its flagship brands, with profit from recurring operations up 13 per cent.
“Parfums Christian Dior experienced remarkable growth and increased its market share in all regions of the world. The launch of its new perfume Joy and the exceptional worldwide success of Sauvage and the other iconic perfumes J’adore and Miss Dior are behind the strong growth of the Maison,” said LVMH.
“Makeup and skincare also grew rapidly. Guerlain progressed well, driven in particular by the success of Abeille Royale in skincare and Rouge G in makeup. Benefit strengthened its leading position in the eyebrow segment and Parfums Givenchy accelerated its performance, thanks in particular to makeup and its new perfume L’interdit. Fresh and Fenty Beauty by Rihanna continued their exceptional growth.”
The wines and spirits business group achieved organic revenue growth of 5 per cent and profit from recurring operations also increased by 5 per cent.
“The business group reaffirmed its leadership position by pursuing its value strategy and balanced geographic development.”
The Hennessy business enjoyed “strong momentum” in Mainland China, LVMH said.
This story originally ran on sister-site Inside Retail Asia.