PARIS -- The luxury goods industry is back on a roll, according to Bernard Arnault, chairman of LVMH Moet Hennessy Louis Vuitton.
Speaking at a meeting for financial analysts here, Arnault said that group sales should grow at a steady clip, and that this year's net profits should rise 20 percent, thanks to a turnaround in consumer buying.
"Since the middle of 1993, we have been starting to come out of this recessionary phase, which started with the Gulf crisis and war in 1991," Arnault told analysts here last Thursday.
Last year for LVMH "finished well, given that the consumer has become more demanding, and no longer has an uncontrollable appetite for luxury goods," Arnault said.
As reported, LVMH's net earnings before nonrecurring gains last year slipped 1.3 percent to $514.5 million (2.97 billion francs) at current exchange rates. However, extraordinary gains of $104.3 million (602 million francs), mainly from last year's sale of the Roc cosmetics business to Johnson & Johnson, pushed 1993's final profit to $618.4 million (3.57 billion francs).
Consolidated sales jumped 10 percent to $4.12 billion (23.8 billion francs), and sales growth has continued into 1994, with consolidated sales up 28 percent through February -- or 20 percent at constant exchange rates.
Arnault attributed LVMH's sales progress in a tough international economy to a focus on quality and price ratios, keeping a steady eye on image, strong advertising and promotional activities.
Arnault also spent time discussing the various rumors of acquisitions that LVMH might be considering.
Many industry observers have speculated that Arnault would grow LVMH through purchasing other luxury goods companies, especially in light of the roughly $1.91 billion (11 billion francs) on LVMH'S balance sheet from Guiness's purchase of 34 percent of LVMH'S wine and spirits businesses and the group's resultant restructuring.
The Paris financial rumor mill has in recent weeks singled out L'Oreal, Elf Sanofi and Guerlain as acquisition targets. Speculation about L'Oreal came up because the longstanding agreement between L'Oreal's majority shareholder, Gesparal, controlled by Liliane Bettencourt, and Nestle, which holds 49 percent of Gesparal, to maintain their percentage holdings, expires March 26.
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