STRONG QUARTER AT LVMH PACED BY DFS, SEPHORA
Byline: Katherine Weisman
PARIS — LVMH rang in the new century with another strong quarter.
Fueled by double-digit growth in all segments except champagne and wines, LVMH Moet Hennessy Louis Vuitton began 2000 on a high note, with consolidated sales rising 39 percent to nearly $2.3 billion for the first quarter ended March 31.
The company’s greatest gain — a sales increase of 58 percent to $692.6 million — was registered by the selective retailing division, grouping DFS, Sephora and Miami Cruiseline Services, which was acquired in January. Miami Cruiseline, integrated into DFS, helped retail sales grow in the U.S. Sales for Miami Cruiseline and DFS combined increased 58 percent for the quarter. Excluding Miami Cruiseline, DFS sales rose 31 percent for the period, explained an LVMH spokesman.
French companies report earnings only for the half- and full year. Dollar figures have been converted at current exchange rates.
Same-store sales for Sephora in the U.S. increased “significantly,” but precise growth figures weren’t disclosed. Meanwhile, the acquisition of two Italian perfumery chains, Laguna and Boidi, increased European market share for Sephora, whose European sales in the quarter rose 35 percent. Same-store sales for Sephora in Europe were unavailable.
Fashion and leather goods scored the next highest rate of growth. First-quarter sales surged 37 percent to $700.2 million. The division’s performance was paced by the 50 percent growth in revenues achieved by Louis Vuitton Malletier. Louis Vuitton opened two new global stores, in Singapore and Hong Kong. The new colors and shapes for the Epi range, launched this year, are proving successful in stores, and footwear has benefited from Vuitton’s current ad campaigns, the company noted.
Fragrances and cosmetics enjoyed a 24 percent sales gain to $402.8 million for the quarter. Turnover of Christian Dior Parfums, Parfums Givenchy, Guerlain and Kenzo rose 22 percent for the period. The company noted that sales for Christian Dior’s new scent, J’Adore, are exceeding expectations in most markets and are notably strong in the U.S. Indecence d’Organza and Pi from Givenchy, along with Time for Peace from Kenzo, also are showing “excellent results,” the company said.
Smaller niche brands acquired by LVMH — Bliss, Hard Candy, Benefit and Make Up Forever — are also showing strong growth and accounted for the remaining 2 percent in sales growth for the division, according to a group spokesman.
The new watch and jewelry division, created at the end of last year with the acquisition of several key watch brands and parts makers, posted sales of $114 million for the first quarter. The company noted that sales for Tag Heuer are growing rapidly in Southeast Asia and Europe, and the international launch of the Alter Ego model has been well received. The distribution of Ebel, Chaumet and Zenith is benefiting from synergies in using Tag Heuer’s existing network.
Champagnes and wines not only failed to match other units with double-digit increases, but sales for this segment actually fell 6 percent to $223.3 million. Cognac sales rose 16 percent for the quarter to $181.5 million with strong performance noted particularly in Southeast Asia. VSOP and XO grew significantly in Southeast Asia and in the U.S., the company said.
The 6 percent sales decline for the champagne and wine division was in line with forecasts. The company explained that sales in the first nine months of 1999 were exceptionally high due to pre-2000 celebration buying fever, and fourth-quarter sales had to be limited “for optimal stock management.”
Among its other fashion companies, the company noted that sales at Kenzo, Loewe and Celine are on an upward trend. The latter two brands are starting to benefit from product launches, greater distribution control and renovations of their boutique networks.
The company said it also benefited from the “high-profile media coverage” generated by the Louis Vuitton Cup challenger races in New Zealand, a qualifier for the America’s Cup. Prada, a partner with Louis Vuitton in the acquisition of Fendi last year for nearly $1 billion, was a major contender in the regatta with its Luna Rossa boat but lost in the finals.
Sales for other activities, which include media interests, were $11.4 million.
Net profits for the quarter weren’t disclosed but will continue to be reported on a six-month and annual basis.