Rebound in sales and profitability in the first half of LVMH
LVMH Tuesday reported a strong rebound in sales and profitability in the first half, driven by the performance of Louis Vuitton and the resumption of activities that had been during the crisis, heavily penalized by destocking.
After Hermes and Burberry, the giant figures confirm global luxury goods sector recovery in the first quarter after suffering in 2009 the largest decline in its history with sales down 8%, according to estimates from Bain & Co.
LVMH saw sales reach 9.09 billion euros, a figure slightly above the consensus reached by the editor of Reuters (8.87 billion euros), growing by 16% as reported.
In comparable data, the dynamics of organic growth was confirmed, the sales growth standing at 14% in the first half, after 13% in the first three months of the year.
Full advantage of the good momentum in sales and cost reduction programs implemented in 2009, during the crisis, current operating income jumped 33% to 1.816 billion euros (1.7 billion Reuters ), advancing 2.5 points the group's operating margin to 19.9% (against 17.5% a year earlier).
Unsurprisingly, these are activities that had suffered most from the crisis and overstocks – namely wines and spirits (Moet & Chandon, Dom Perignon or Ruinart) jewelry and watches (Tag Heuer, Zenith, Chaumet and Fred ) – which recorded the highest increases in sales (+18% and +24% respectively on a comparable basis).
In fashion, leather goods, the division's most profitable group with Louis Vuitton, the main profit center of LVMH sales up 14%.
Turnover increased 10% in perfumes and cosmetics (Dior, Givenchy and Guerlain) and 13% in the selective distribution (perfumery chain Sephora, the department store Le Bon Marche, or network based DFS sales in duty by passengers).
The stock closed at 92.26 euros on the Paris Stock Exchange Tuesday, down 2.91% to an increase of 17.7% since the beginning of the year, outperforming the European diversified consumer goods advancing 13.7% over the period.
The value of trades on valuation multiples of about 18 times its estimated profits for 2011, against 16 times the industry average for non-Hermes.