A very encouraging first half despite the economic environment

LVMH Moët Hennessy Louis Vuitton today announced that sales for the first half of 2002 reached 5 823 million Euros, a 2% increase compared to the first half of 2001 and a 4% increase based on constant exchange rates. This performance, which has resulted in gains in market share and which should be compared with a strong performance in the first half of 2001 (+13%), demonstrates the resilience LVMH’s major brands, which remain highly attractive despite a less favourable economic environment.

On a divisional basis, sales evolved as follows:

In million euros First half 2002 First half 2001 Change
Wines & Spirits 916 855 + 7 %
Fashion & Leather Goods 2 015 1 744 + 16 %
Perfumes & Cosmetics 1 058 1 039 + 2 %
Watches & Jewelry 255 262 - 3 %
Selective Retailing 1 561 1 712 - 9 %
Other activities and eliminations 18 74 na

All of our major brands achieved sales growth at constant exchange rates in the first half, despite the ongoing weakness of tourism. Sales in the second quarter were impacted by exchange rate fluctuations, which were offset on the operating level by good hedging cover. Furthermore, buying trends of domestic Japanese and Korean clients were negatively impacted by the short-term effects of the World Cup Football in the month of June.

In this context, the exceptional performance of Louis Vuitton was particularly noteworthy, with good sales growth in Japan and the US in the second quarter, in contrast to most of its competitors who saw a considerable decline in sales in the same period.

Operating profit growth should be approximately 15% in the first half, driven in particular by excellent performances of the Wines and Spirits division and Louis Vuitton. In addition, a clear improvement in results of the Selective Distribution business group, in line with our forecasts, contributed to this performance. Sephora US continued its remarkable trend of more than 20% same-store sales growth.
Cash flow generated in the first half rose considerably, thanks to improved operating profit and the sale of certain non-strategic assets.
The second half of 2002 should be more favourable than in the first half, with a concentration of new product launches during this period, a larger number of store openings and the second half of 2001 providing an easier base for comparative performance. In particular, Louis Vuitton will launch the ” Tambour ” watch, for which there are already waiting lists around the world, and Christian Dior will launch a new female perfume, which shows very promising signs. Numerous other new products will arrive on the market, and our major brands will aim further to increase their market share.

As a result of these factors, LVMH confirms the significant rebound of results expected for the end of 2002.

LVMH has several key attributes which will enable it to continue grow and further improve its leadership position in the worldwide luxury products market; the strength of the Group’s brands, the quality and creativity of its products, the good geographic balance of sales between Europe, the US and Asia, the generation of recurring cash flow, and the professionalism and dynamism of our teams.