PARIS — Leading luxury conglomerates Kering and LVMH Moët Hennessy Louis Vuitton on Thursday reported lackluster first-half results, as the slowdown in China as well as persistent economic volatility in Europe continued to penalize the world’s top brands.
Despite a sharp slowdown in sales growth compared with the same period last year, both groups said they remained upbeat for the balance of 2013.
Bernard Arnault, chairman and chief executive officer of LVMH, said the group’s first-half performance reflected the “exceptional appeal” of its brands.
“It is with confidence that we approach the second half of the year and rely on the creativity and quality of our products, as well as the effectiveness of our teams, to pursue further market-share gains in our traditional markets as well as in high-potential emerging territories,” Arnault said.
François-Henri Pinault, chairman and ceo of Kering, called the group’s first-half performance “solid” and said weak points were being addressed.
“The strength of our brands, their organic growth potential, the good geographic balance of our activities and the commitment of our teams all reinforce our confidence in the group’s ability to further improve its performances in the full year,” he said.
During a conference call after the results were disclosed, Jean-Marc Duplaix, Kering’s chief financial officer, said the second half of the year would bring “more of the same. We are expecting the trends to continue in luxury, and we know there is no short-term turnaround” for the revenue and gross margin trends in the sport and lifestyle division.
At LVMH — parent group of brands including Bulgari, Céline, Dom Perignon, Sephora and Guerlain — net profits fell 6.2 percent in the first half to 1.58 billion euros, or $2.07 billion, on sales that rose 5.6 percent to 13.70 billion euros, or $17.98 billion.
Revenues in the second quarter gained 5.7 percent to 6.75 billion euros, or $8.81 billion, after increasing 5.5 percent in the first three months of the year. In the second quarter of 2012, LVMH had registered a 26.5 percent jump in sales.
Sales of fashion and leather goods rose 1.2 percent in the six months to June 30, totaling 4.71 billion euros, or $6.19 billion, with profits from recurring operations broadly flat compared with the same period a year earlier.
With “significant progress” in the makeup segment, revenues from perfumes and cosmetics rose 4.5 percent to 1.80 billion euros, or $2.37 billion.
The conglomerate’s watches and jewelry business posted a 2.5 percent drop in sales to 1.31 billion euros, or $1.72 billion, while wines and spirits were up 2.8 percent to 1.81 billion euros, or $2.37 billion.
Revenues in the selective retailing segment jumped 17.4 percent to 4.21 billion euros, or $5.54 billion. Profits from recurring operations at the division, which includes business from Sephora, rose 9 percent in the first half as LVMH ploughed funds into its new concessions in the Hong Kong airport.
While LVMH does not provide breakdowns by brand, it cited “exceptional” profitability at its cash-cow Louis Vuitton brand and said the brand continued to “develop well” with the opening of two new stores in Venice and Munich. It also highlighted “steady” growth at Céline.
The conglomerate provided no sales or revenue guidance other than to reinforce its “global leadership position in luxury goods.”
LVMH noted it would pay out an interim dividend of 1.20 euros, or $1.51 at current exchange, on Dec. 3. It released the figures after stock markets closed in Europe and is due to have a conference call today to discuss the results.
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