LVMH's Revenue Climbs 15%, Powered by Fashion, Leather Sales -- WSJ
January 29 2020 - 3:02AM
Dow Jones News
By Matthew Dalton
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 29, 2020).
PARIS -- LVMH Moët Hennessy Louis Vuitton SE reported record
results last year, driven by strong growth at the fashion houses
Louis Vuitton and Christian Dior.
Revenue rose 15% to EUR53.67 billion ($59.17 billion) and net
profit 13% to EUR7.17 billion, both record highs. All divisions
grew, led by fashion and leather goods -- including Louis Vuitton
and Dior -- where revenue surged 20%. The results were in line with
analysts' expectations.
LVMH is the world's largest luxury-goods company, and its
results are considered a bellwether of the industry as a whole. But
the Paris-based conglomerate in recent years has outperformed most
of its competitors, gaining market share.
Louis Vuitton is the world's best-selling luxury brand. LVMH
also owns the Italian jeweler Bulgari, cosmetics retailer Sephora,
cognac maker Hennessy and dozens of other brands.
It struck a deal last year to buy the American jeweler Tiffany
& Co., making LVMH the world's largest jeweler.
The company has powered through protests in Hong Kong for much
of the year, relying on its geographic diversification to serve
clients who are avoiding the city, long a magnet for luxury
shoppers.
Sales in Hong Kong fell sharply in the fourth quarter but had
little impact on the group's overall performance.
The year capped a decade of uninterrupted revenue growth at
LVMH, each year setting a new record high for the group. While
sales have been buoyed by some acquisitions -- Bulgari in 2011, the
ready-to-wear division of Dior in 2017 and the luxury hotel chain
Belmond last year -- most of the increase is due to sales growth at
brands the group already owned, in particular Louis Vuitton.
The period saw LVMH ride a wave of demand for luxury goods from
Chinese shoppers, who travel the world to shop at the
conglomerate's boutiques. But now LVMH and other luxury companies
face the threat of the coronavirus in China, where the government
has quarantined Wuhan, the outbreak's epicenter. The virus has
thrown Chinese consumers' travel plans into turmoil just as the
shopping season of the Lunar New Year has arrived. Chinese shoppers
are the luxury industry's most important clientele, representing
more than a third of global sales, according to consulting firm
Bain & Co.
Bernard Arnault, the chief executive and controlling shareholder
of LVMH, said he has asked his teams in China about the impact of
the outbreak.
"It's very early to have an answer," Mr. Arnault said Tuesday,
speaking to reporters and analysts.
If the consequences of the outbreak are felt through March,
"that wouldn't be terrible," he said. "If it lasts two years, that
would be another story."
Growth slowed somewhat in the fourth quarter, reflecting tax
issues in Japan and unrest in Hong Kong. Hennessy also sold cognac
to distributors ahead of the winter holiday season in the third
quarter -- earlier than normal -- lowering sales in the fourth
quarter. The company also wrote off stock of some smaller cosmetic
brands in the U.S.
Write to Matthew Dalton at Matthew.Dalton@wsj.com
(END) Dow Jones Newswires
January 29, 2020 02:47 ET (07:47 GMT)
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