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LVMH: Fashion, Leather Goods Offset Muted Hong Kong Growth

LVMH Moët Hennessy Louis Vuitton’s revenues grew 12 percent in the fourth quarter and rose 15 percent in 2019, as the company pointed to continued growth in all regions.

In a Nutshell: LVMH cited “exceptional growth at Louis Vuitton and Christian Dior” as reasons for healthy results in the quarter and year, adding it also saw “success at both iconic and new products at Louis Vuitton, whose profitability remains at an exceptional level.”

In the quarter LVMH also inked a deal to acquire Tiffany & Co. for $16.2 billion. Pointing to another strength, there was also “good resilience of DFS, faced, in the second half, with the situation in Hong Kong,” the company said of its firm’s duty-free shops business catering to tourists, which has been hit with the social unrest that has rocked the China-owned territory since last summer.

Net Sales: For the quarter ended Dec. 31, net sales were 15.27 billion euros ($16.83 billion). That total included sales of 6.36 billion euros ($7.01 billion) in its fashion and leather goods division, 1.14 billion euros ($1.26 billion) in watches and jewelry, and 4.24 billion euros ($4.67 billion) in selective retailing.

For the year, revenue rose 15 percent to 53.67 billion euros ($59.16 billion) from 46.83 billion euros ($51.62 billion) a year ago. By business group, revenue for the year in the fashion and leather goods division grew 20.5 percent to 22.24 billion euros ($24.52 billion), while profit from recurring operations in the fashion and leather goods operation was up 24 percent to 7.34 billion euros ($8.09 billion).

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The company said its “Louis Vuitton X” exhibition in Los Angeles “successfully showed the Maison’s many artistic collaborations,” while Christian Dior “has had a remarkable year.” It cited the brand’s exhibition at London’s Victoria and Albert Museum, where it drew a record attendance of nearly 600,000 visitors, as proof of the fashion house’s influence.

For the fourth quarter, sales in Hong Kong were down 40 percent, compared with a 25 percent decline in the third quarter, Jean-Jacques Guiony, chief financial officer, said during an investor call. Despite the decline, the impact from Hong Kong meant that overall growth in the quarter was limited to “was only 15 percent,” which Guiony described as “still pretty good.”

Earnings: The company said net profit for the year rose 13 percent to 7.17 billion euros ($7.90 billion). Profit for the year from recurring operations rose 15 percent to 11.50 billion euros ($12.68 billion).

Looking ahead to 2020, the company said in an investor presentation on results that it is “cautiously confident,” adding that despite “buoyant demand at the beginning of the year, vigilance [will be] maintained in an uncertain geopolitical context.”

CEO’s Take: “The desirability of our brands, the creativity and quality of our products, the unique experience offered to our customers, and the talent and the commitment of our teams are the Group’s strengths and have, once again, made the difference. In addition to the many successes of our Maisons, highlights of the year include…the partnership with Stella McCartney and the agreement with prestigious jewelry Maison, Tiffany & Co.,” Bernard Arnault, chairman and CEO, said.

The world’s third-richest man added that the company is driven by a permanent commitment to perfection and quality, and by a long-term vision in connection with its commitment for preserving the environment and sustainability.

“In a buoyant environment that remains uncertain in 2020, we continue to be vigilant and focused on our objectives for progress. We can count on the strength of our brands and the agility of our teams to reinforce, once again in 2020, our leadership in the universe of high-quality products,” Arnault said.