Sales growth at LVMH‘s fashion and leather good unit, its biggest business (which includes its flagship brand Louis Vuitton) increased by 7 percent in the quarter to December 31 from 3 percent in the previous three months, beating analysts’ growth expectations of 4-5 percent. LVMH said the profitability of Louis Vuitton, remained unchanged in 2013 and its upmarket repositioning progressed, but it admitted to production constraints.
“We have waiting lists that are getting longer,” Chairman and CEO Bernard Arnault said on Thursday at the group’s annual results presentation referring to Louis Vuitton, the No.1 luxury brand which generates more than 7 billion euros in annual sales. When LVMH published its mid-year figures in July, there was concern about Louis Vuitton losing momentum after having enjoyed stellar growth for years.
Those worries continued to weigh on the group, leading its shares to be among the worst performers in the European luxury goods sector in 2013. Last year, LVMH shares lost 4.5 percent, while this month they are down 7.6 percent.
As Louis Vuitton put its worldwide retail expansion on hold, the numbers published for the brand are close to what its same-store sales growth would be, as they were previously boosted by shop openings, analysts say. LVMH does not publish same-store sales for any of its brands.
Recurring profit from LVMH’s fashion and leather unit fell 4 percent to 3.14 billion euros in 2013, a drop the group blamed on investments in the retail networks and image of brands such as Fendi and Berluti.
Asked about LVMH’s acquisition strategy going forward, Arnault said the group was open to strategic opportunities but was not studying any target at the moment. LVMH’s overall sales figures benefited from strong growth at its duty-free and Sephora cosmetics retail chain as organic sales rose 17 percent in 2013.
Arnault said Sephora was on its way to becoming the biggest distributor of perfume and cosmetics in the United States where sales had been rising in “double digit” terms. The group said it had 150 Sephora shops in China and was opening about 30 shops a year in that country, where it added Sephora was profitable.
LVMH’s annual sales reached 29.15 billion euros in 2013, roughly in line with forecasts, while profit from recurring operations rose 2 percent to 6.02 billion, compared with a 13 percent rise the previous year. The group’s operating margin slipped to 20.7 percent from 21.1 percent in 2012.
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