LVMH reports strong sales growth for the fourth quarter ; Operating profit growth of at least 25% in 2002
LVMH, Moët Hennessy Louis Vuitton, the world’s leading luxury products group, today announced that consolidated sales for 2002 of 12.7 billion Euros increased by 4 % over those for 2001 and by 8% on a constant exchange rate basis.
Sales growth in the fourth quarter accelerated, growing by 8% over the same period in 2001 and by 16% on a constant exchange rate basis. This progress, which should be compared to a period which itself saw growth on a constant exchange rate basis, was particularly notable against the background of general economic uncertainty at the end of the year. Louis Vuitton in particular, made excellent progress, reinforcing its leadership in the luxury marketplace and recording sales growth for the quarter of 23% on a constant exchange rate basis, on top of double digit sales growth for the same period in 2001.
On a divisional basis, the evolution was as follows:
Fourth Quarter
| In million euros | 2002 | 2001 | Change |
|---|---|---|---|
| Wines & Spirits | 810 | 822 | - 1 % |
| Fashion & Leather Goods | 1 175 | 965 | + 22 % |
| Perfumes & Cosmetics | 713 | 667 | + 7 % |
| Watches & Jewelry | 168 | 158 | + 6 % |
| Selective Retailing | 981 | 922 | + 6 % |
| Other activities and eliminations | - 3 | 31 | na |
| Total | 3 844 | 3 565 | + 8 % |
Year
| In millions of Euros | 2002 | 2001 | Change |
|---|---|---|---|
| Wines & Spirits | 2 267 | 2 232 | + 2 % |
| Fashion & Leather Goods | 4 204 | 3 612 | + 16 % |
| Perfumes & Cosmetics | 2 334 | 2 231 | + 5 % |
| Watches & Jewelry | 552 | 548 | + 1 % |
| Selective retailing | 3 339 | 3 497 | - 5 % |
| Other activities and eliminations | -6 | 109 | na |
| Total | 12 690 | 12 229 | + 4 % |
The major champagne brands Moët & Chandon, Veuve Clicquot, Dom Perignon and Krug all recorded strong volume growth in 2002, notably in the U.S., the U.K. and Japan. Hennessy continued to gain market share with growth coming notably in Asia (excluding Japan), and the U.S. as well as Europe where Fine de Cognac was launched with success. Sales figures for the Wines and Spirits business group in general were negatively impacted by exchange rates in the fourth quarter, although the impact was limited at the operating income level due to an effective currency hedging policy. On a constant exchange rate basis, and excluding Pommery, which was sold in May 2002, sales grew 11% in 2002 for the Wines and Spirits business group.
The Fashion & Leather Goods business group recorded sales growth of 16% in 2002. Louis Vuitton benefited from the successful reception of new products such as the Tambour watch, for which there is a worldwide waiting list, the Papillon bag and the leather collection designed by Bob Wilson, as well as the demand for the more traditional products, whose exceptional quality is increasingly sought after. This performance was evident across all regions with particular support coming towards the end of the year from the major markets, notably France, the U.S. and Japan.
Annual sales in the Perfumes & Cosmetics business group increased, for the fourth consecutive year, faster than the market, with the successful launch in the second half of Dior Addict and the continued development of Givenchy pour Homme in Europe. BeneFit and Fresh also continued to grow very satisfactorily.
The Watches & Jewelry business group recorded a sales increase for LVMH brands of 4% in 2002 while the planned reduction in the production and sales on behalf of third party brands outside the Group continued, resulting in a 1% increase in overall sales in 2002. Montres Christian Dior recorded strong sales growth, thanks to the success of its latest creation, the Riva Sparkling. TAG Heuer enjoyed progress in all its key markets and also captured market share. Investments in brand communications has been reinforced across the board.
Sales at DFS moved in line with the progressive recovery in global tourism. Sales have started to grow since September, but have not yet returned to the levels of 2000. DFS is continuing to implement its restructuring initiatives and optimise performance. Sephora continued to expand in both the U.S. and Europe with sales growth of 9% in 2002. Sales growth in the U.S. was particularly encouraging in 2002 with an increase of 25% on a comparable stores basis in a highly competitive market. The performance of the new stores reflects the continued success of the concept.
2002 operating profit will increase by at least 25% compared to the same period last year, with growth in the second half much greater than the 19% recorded in the first half of 2002.
Outlook for 2003
Against an economic, political and financial environment which remains difficult, LVMH will continue to pursue its long-term strategy based on the creativity and quality of its products. The Group will continue to concentrate on the development of its “star” brands and improving results.
Based on its portfolio of unique brands and its talented teams, the LVMH Group is well positioned to face the challenges ahead in 2003, as in 2002. The Group’s objective this year is once again to deliver tangible operating profit growth. LVMH should thus continue to gain market share and reinforce its leadership in the global luxury market.
“Certain information included in this release is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially. The Company’s businesses include its wines and spirits, fashion and leather goods, fragrances and cosmetics, watches and jewelry, and selective retailing activities, and its outlook is predominantly based on its interpretation of what it considers to be the key economic factors affecting these businesses.
Forward-looking statements with regard to the Company’s businesses involve a number of important factors that are subject to change, as are mentioned under “Risk Factors” in the Company’s Form 20-F for the year ended December 31, 2001 which is on file with the United States Securities and Exchange Commission”.
