TRBUSINESS BETTER ASIAN MOMENTUM

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1 The LVMH Moët Hennessy Louis Vuitton company has reported that all of its geographic areas continue to progress well as it announced 12% revenue growth to 19.7bn ($23.1m) for the first six months. LVMH up 12% to $23.2bn as DFS recovers well in HY1 LVMH said it benefited from a favourable comparison base particularly in Asia but also in France, where activity was impacted last year by a decline in tourism. Underpinning this, the world s leading luxurygoods company said that group revenue increased by 15% in the second quarter, as organic revenue growth grew by 12%, while profit from recurring operations rose by 23% to 3,640m ($4,281m), the operating margin rose one point to 18.5% and the group share of net profit rose by 24% to 2,119m ($2,492m). Click on all tables to enlarge. Source for all tables: LVMH. BETTER ASIAN MOMENTUM Along with other divisions, DFS Group benefited strongly from much better momentum in Asia, with the company s CFO Jean-Jacques Guinoy confirming the significant sales recovery in Hong Kong, Macau and Japan, alongside DFS newly opened Gallerias in Cambodia and Venice. [Guinoy s comments were made at a post-results conference call for analysts yesterday-ed]. Guinoy also confirmed that DFS has increased its loyalty programme marketing efforts as well as introducing a new travel booking service and he added that the travel retailer is also planning to open two new beauty points of sale in Macau. In addition, the retailer is also continuing to modernise its store network including outlets in Hong Kong, Auckland and Sydney and Guinoy confirmed that it will benefit at the end of this year from the end of its unprofitable Hong Kong International Airport concession a business which has proved a big drag on its profitability. BERNARD ARNAULT: EXCELLENT FIRST HALF There was also more positive news from most of LVMH s other divisions, with Chairman and Ceo Bernard Arnault reflecting this in his positive round-up comments.

2 He said: LVMH has enjoyed an excellent first half, to which all our businesses contributed. In the current climate of geopolitical and economic instability, creativity and quality, the founding values of our group, have more than ever become benchmarks for all. The increasing digitalization of our activities furthermore reinforces the quality of the experience we bring to our customers. In an environment that remains uncertain, we approach the second half of the year with caution. We will remain vigilant and rely on the entrepreneurial spirit and talent of our teams to further increase our leadership in the world of high-quality products in In summary, LVMH listed a number of highlights from the first six months trading, before analysing each division s performances individually. IMPRESSIVE HIGHLIGHTS Besides the aforementioned double-digit increases in both revenue and profit from recurring operations, the luxury goods company pointed to good growth for the group as a whole in Europe, Asia and the United States, outstanding momentum and exceptional profitability at Louis Vuitton and LVMH s planned acquisition of Christian Dior Couture (finalised on 3 July). It also highlighted the good start to the year for Wines and Spirits, the integration of premium-class luggage brand Rimowa and the strong performance of new products at Christian Dior. LVMH also noted the growth at Bvlgari, an excellent response to TAG Heuer s new products and the continued strengthening of Sephora s omnichannel strategy.

3 Other highlights included cash from operations before changes in working capital of 4.5bn ($5.2bn), an increase of 23% and a net debt to equity ratio of 14% at the end of June In terms of the results by division, LVMH said wines and spirits had a good start to the year with solid growth in the US market and improved momentum in China. WINES & SPIRITS +12% The company said: The Wines & Spirits business group recorded organic revenue growth of 10%. On a reported basis, revenue rose 12% and profit from recurring operations increased by 21%. The business group reaffirmed its commitment to innovation with many initiatives across the brands. All the Champagne Houses have performed well. Europe and the United States were particularly dynamic. Hennessy Cognac continued to show strong growth in the US market, while demand is recovering in China. The second half of the year is expected to experience a slowdown in volume growth, given the existing supply constraints. The group also reported good creative momentum at Louis Vuitton within the Fashion & Leather Goods business group as a whole, which generated organic revenue growth of 14%. [On a reported basis, revenue rose 17%, with profit from recurring operations up 34%-Ed]. Commenting on the divisional performance, LVMH said: The momentum at Louis Vuitton, driven by its exceptional creativity, was demonstrated across all its product categories. The Cruise Collection presented at the Miho Museum in Kyoto, Japan, was a great illustration of this.

4 STRONG LUXURY GROWTH TRENDS The launch of new models resulting from the collaboration with the artist Jeff Koons and the cult New York skatewear brand, Supreme, were the highlights of the first half. Fendi continued its strong growth and enriched its leather goods lines, notably with the new Kan-I model. Loro Piana strengthened its presence in Asia with several openings. Céline, Loewe and Kenzo experienced good growth. Marc Jacobs strengthened its product offering and continued its restructuring. Other brands continued to grow. Rimowa, which joined the LVMH Group, is consolidated for the first time in the first half-year accounts. LVMH also pointed to healthy organic growth of 12% for its Perfumes & Cosmetics business group as revenues grew by 14% and profit from recurring operations by plus-7%. DIOR PERFORMS STRONGLY Christian Dior showed strong growth momentum, sustained by the vitality of its iconic fragrances J adore and Miss Dior, the continued success of Sauvage and the performance of its latest makeup creations, said LVMH. Guerlain enjoyed a successful launch of its new perfume, Mon Guerlain, represented by Angelina Jolie. Parfums Givenchy experienced rapid growth in makeup, especially its line of lipsticks. Benefit continued to roll out its Brow Collection. It was also a similarly positive story at the Watches & Jewelry division where the parent company reported a good first half for Bvlgari alongside the continuing successful development of TAG Heuer. This division recorded organic revenue growth of 13% with revenue up 14% and profit from recurring operations increasing by 14%. Breaking the key performances down, LVMH said that Bvlgari enjoyed an

5 excellent first half and continued to gain market share. LVMH up 12% to $23.2bn as DFS recovers well in HY1 DFS GROUP BACK IN GROWTH The company added: This dynamic is notable in both jewellery and watchmaking, especially in China and Europe, thanks to the success of the iconic Serpenti and B-Zero 1 lines and the new Octo Finissimo watch. TAG Heuer experienced solid revenue growth in a tough watch market. The new products created in its flagship Carrera, Aquaracer and Formula 1 collections were very successful and a new generation of the smart watch was launched. Hublot continued its growth. Last, but certainly not least, the Selective Retailing division reported growth at Sephora as well as improved momentum at DFS Group in Asia (as mentioned). SEPHORA CONTINUES ITS STRONG PROGRESS LVMH reported that this division returned organic revenue growth of 12% over the trading period, with sales up 15% on a reported basis and profit from recurring operations delivering plus-8%. Commenting on the performance within its results statement, LVMH said: Sephora continued to make progress and reinforced its omnichannel strategy. While increasing its share of online sales, Sephora continued to invest in extending its network and renovating existing stores, particularly in New York and Dubai.

6 Le Bon Marché developed anew online shopping experience by launching its digital platform 24 Sèvres. DFS experienced better momentum in Asia, while the T Galleria(s), which opened in 2016 in Cambodia and Italy, continued to develop. SUPPLEMENTARY: [Responding to an analysts question at the post results announcement conference call yesterday, CFO Jean-Jacques Guiony acknowledged that the Hong Kong market, a vital one for LVMH s brands and retailers DFS in particular is now performing more positively, although he said this needed to be seen in the context where the market s sales declines have been going down two or three years in a row in a double-digit way. Nevertheless, he said all of the signs are now much better: The business is growing globally double digit in Hong Kong in the first half of the year it s true for most of the brands, including DFS and Vuitton. He said customer traffic is definitely much better along with the size of the average purchase in most stores ]. LOOKING FORWARD TO THE FULL YEAR Turning to the outlook for the rest of 2017, LVMH management says it will continue to pursue gains in market share through the numerous product launches planned before the end of the year and its geographic expansion in promising markets, while continuing to manage costs despite the context of geopolitical and currency uncertainties. The company concluded: Our strategy of focusing on quality across all our activities, combined with the dynamism and unparalleled creativity of our teams, will enable us to reinforce, once again in 2017, LVMH s global leadership position in luxury goods. The company added that an interim dividend of 1.60 ($1.87) will be paid to shareholders on December 7th, [The additional comments attributed to LVMH CFO Jean-Jacques Guinoy at the post-results announcement conference call have been reproduced by courtesy of Seeking Alpha transcripts in line with its terms of agreement. The company can be contacted at