By  on May 13, 2005

PARIS — Luxury titan Bernard Arnault again is entertaining the idea of acquisitions.

After several years of focusing on organic growth, the LVMH Moet Hennessy Louis Vuitton chairman on Thursday said buying brands was on his midterm agenda.

He also predicted some of LVMH's "important" competitors would fall on tough times in the next few years and that when they did he would be ready to buy — but "at the right price."

Arnault's comments came as he delivered an upbeat outlook for "significant" growth in full-year operating profit and sales at back-to-back LVMH and Christian Dior shareholders' meetings here. He told investors the year had started strong and that sales in April and May had been along the lines of the 11 percent like-for-like gain the group reported in the first quarter.

"It's a good start and we're confident," Arnault said, reiterating a longstanding pledge to double LVMH's size within the next five years.

The market greeted Arnault's comments positively, driving LVMH stock up 2 percent to close at 57.05 euros, or $73.59 at current exchange, in trading on the Paris Bourse.

With the major European firms reporting strong first-quarter sales and predicting more momentum over the rest of the year, luxury seems set for continued growth.

At the Christian Dior fashion business, for example, LVMH said sales in April gained 16 percent at constant currency rates, and 11 percent after currency exchange. (Dior sales climbed 7.4 percent to 146 million euros, or $188.3 million, in the first quarter.)

Europe continues to be soft, Arnault said. But sales are robust in America and Asia. "I hope it will continue," said Arnault. "The only problem is the dollar."

Indeed, the unfavorable dollar-euro exchange cost LVMH last year. As reported, operating profit rose 11 percent. But the increase was 24 percent at constant exchange rates. LVMH's sales last year climbed 5.6 percent.

Analysts were skeptical that LVMH would find any "quality" brands to buy soon. "We remain convinced that several disposals should occur over the next 12 to 18 months," said HSBC luxury analyst Antoine Belge. "Brands whose names are rarely mentioned by management — like Donna Karan, Givenchy, Kenzo, Thomas Pink, Fred, Guerlain…are likely candidates in our view."

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