PARIS — LVMH Moët Hennessy Louis Vuitton on Monday reported a 23 percent decline in first-half profits, despite a modest sales gain, as its wines, spirits, watches and jewelry businesses were hurt by heavy destocking by distributors.
But the French luxury group, which was scheduled to report earnings Wednesday, said it still expects to gain market share in 2009 because of product launches, expansion in new markets and cost containments.
A spokesman for LVMH said the company had to publish the earnings earlier than scheduled after they were mistakenly released.
In the first six months of 2009, net profit dropped 23 percent to 687 million euros, or $934.3 million, from 891 million euros, or $1.39 billion, a year earlier. Sales in the period rose 0.2 percent to 7.81 billion euros, or $10.6 billion, from 7.79 billion euros, or $12.15 billion, a year earlier, helped by strong global demand for Louis Vuitton bags and a good performance by the Sephora beauty chain.
In the second quarter, sales were flat at 3.79 billion euros, or $5.15 billion.
Currency conversions were made at average exchange rates for the respective periods.
“Reassured by the good resilience” in the first six months of the year, chairman and chief executive officer Bernard Arnault said LVMH is looking at the second half with confidence, without providing a specific outlook.
Fashion and leather goods sales grew 8 percent to 2.98 billion euros, or $4 billion. Louis Vuitton bags and luggage had a “particularly exceptional” first half of the year, said LVMH, as the unit reported double-digit growth and strengthened its position across all regions. The brand also received a boost from Japanese shoppers, who took advantage of the strengthening yen by making purchases abroad.
Fendi also improved its performance in the second quarter, LVMH said. However, other of the group’s fashion brands were penalized, especially in the second quarter, by the continued difficult environment at large department stores.
The perfume and cosmetics business increased its market share in the first half despite an 8 percent decline in revenues as distributors limited their orders. Sales were helped by the relaunch of male fragrance Eau Sauvage and the successful launch of foundation Diorskin Nude.
Beauty chain Sephora posted increased revenues across all its markets, especially in China, where it is expanding rapidly.
As forecast by analysts, products that are distributed by third parties — such as wines and spirits, watches and jewelry — were hurt as distributors limited their purchases amid a sharp slowdown in consumer spending.
As expected, revenue from watches and jewelry decreased by 17 percent in the first half amid the sharpest decline in demand for expensive timepieces.Last week, the Federation of the Swiss Watch Industry said total watch exports showed a 26.4 percent drop in the first half of 2009.
The tough economic environment also weighted on LVMH’s wines and spirits business, where revenues declined 17 percent. While Champagne revenue was hit by destocking, the cognac business was more resilient and was supported by Asian markets.
The board of LVMH will still meet Wednesday, as originally planned, to approve the accounts for the first half and the payment of an interim dividend of 0.35 euros, or 49 cents.
Shares in LVMH closed down 2 percent to 61.3 euros, or $87.09, before the release of the earnings.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast