Focusing on excellence

The first half of 2010 has confirmed the rebound seen at the end of last year, leading to double-digit organic revenue growth at all our business groups and a strong improvement in our results. As we anticipated, having demonstrated its resilience and responsiveness even amid the most turbulent moments of the financial crisis, LVMH rapidly took advantage of the first signs of economic improvement.

Quality and creativity: solid, reliable and powerful foundations

We were pleased to see that in an environment which encourages increased selectivity, with the onus being placed on the true intrinsic value of goods, our customers have demonstrated their loyalty to our brands and star products in all our business groups. Monogram and Damier, Louis Vuitton’s signature creations, Miss Dior, Eau Sauvage and J’adore, Dom Pérignon, Guerlain’s Shalimar, TAG Heuer’s Monaco and Carrera are still, as ever, in the limelight. There have been some exceptional new products too. These include Hennessy’s Paradis Horus, Hublot’s King Power watch, the Joséphine jewelry collection at Chaumet and Orchidée Impériale “New Generation” at Guerlain… More than ever, in periods of uncertainty, quality and creativity – the intrinsic values of luxury – are solid, reliable and powerful foundations. At the heart of our Maisons, our creative and commercial teams highlighted our brands’ heritage of excellence to meet these expectations throughout the global marketplace. Harnessing the exceptional savoir-faire of our artisans, proposing powerful, genuine innovations, creating an emotional buzz at our stores, providing our customers with a truly unique experience of luxury and devoting the attention needed; all of these make a difference.

A geographical footprint that facilitates the taking of growth opportunities

Global economies may have emerged from their contraction phase, but factors of instability still exist and the timescale of a solid and durable recovery is uncertain. We will continue to be rigorous and selective, notions which continue to be needed in this context, especially since the basis of comparison will be more challenging in the second half of the year. However, we are approaching the coming months calmly. Calmly because LVMH is fundamentally a solid group and because such an unusually severe crisis has further strengthened us. Calmly because our global presence enables us to take every appropriate growth opportunity: major, developed economies where, over time, our brands have built leadership positions, continue to hold considerable potential for true luxury products. Elsewhere, demand is extremely dynamic and will continue to expand in the emerging markets where we have established solid foundations, and we will accelerate this growth when the timing is right.

We continue to invest selectively in key performance drivers. Firstly, we are developing our production capacity in order to support our growth. For example, Louis Vuitton, which recently completed its Fiesso d’Artico footwear production facility in Italy, is building a new center of excellence where the highest-end leather used in its products will be tanned and is preparing to open a new leather goods workshop. In the world of watch movements, TAG Heuer and Hublot are carrying out similar projects.

Enhancing the quality of our distribution networks is also a priority. Louis Vuitton, which recently inaugurated magnificent new stores in Shanghai, Kobe and London, will open in two new countries during the second half of the year. Sephora has established a bridgehead in Brazil, a market where the distribution of beauty products holds considerable potential.

Confidence shared with investors

Finally, an array of innovations and substantial marketing efforts will be directed towards the most profitable projects in our business lines. Our Wines & Spirits brands will implement ambitious programs to stimulate sales at the end of the year, our Perfumes & Cosmetics product ranges are being strengthened, Louis Vuitton will launch new products, in particular a very promising supple leather range. These are just a few examples.

As the world leader in a growing market, this year LVMH has once again set itself the objective of improving its performance and strengthening market share. This will be driven by its highly-motivated, talented teams across the world who share the Group’s culture of excellence and give us the sense of confidence that inspires us. And we are pleased to see that the financial markets share our confidence, as can be seen in the performance of the LVMH share price over the last six months. I would like to thank the Group’s shareholders who have placed their support in the management of our businesses and in our long-term strategy.

27 July 2010

Bernard Arnault
Chairman & Chief Executive Officer