Disappointing fashion sales dampens spirits at LVMH

Bulgari
saves otherwise poor results

Most
of LVMH’s impressive revenue growth came courtesy of the acquisition
of Bulgari: this lifted the watches and jewellery division to a +46%
(to 2.836 billion euro), while the organic growth of the department
only rose by 6%.

Another
meagre performance was that of the fashion and leather goods division
(still responsible for the majority of LVMH’s revenue), which grew
14% to 9.926 billion euro – even though only half of that growth
was organic. Even worse: that growth dropped to only 5% during the
third and fourth quarter.

CEO
Bernard Arnault made it clear that Louis Vuitton, which generates the
bulk of the fashion unit’s sales, will not seek revenue growth “at
all costs”. The brand will improve existing stores and open “far
fewer” new ones as it seeks to take more control of its future
direction.

Spirited
spirits

The wine and spirits division performed quite well, as wealthy consumers
continue to increase their spending on items such as Moët &
Chandon champagne and Hennessy cognac. Sales roselast year by 17% to
4.137 billion euro, accounting for a very decent 11 % organic sales
growth.

Arnault
remains optimistic for 2013, despite an uncertain economic climate in
Europe. His main concern is a possible international currency war, as
several economic powers attempt to keep their exchange rates low in
order to boost their exports. If the euro grows even stronger against
the dollar or the yen, the result will inevitably be price increases,
he warns.