LVMH goes for growth

Luxury group LVMH last week reported an 11 percent sales gain to €13.9 billion (£9.5 billion) in 2005. Profits from recurring activities climbed 16 percent to €2.7 billion, surpassing analysts' expectations. The company said operating profit rose considerably thanks to strong demand for the Louis Vuitton brand, especially in China, where it realized double-digit organic revenue growth and an “exceptional� level of profitability. The brand's new Denim collection, designed by Marc Jacobs, did particularly well.

The company's Fashion and Leather Goods division, which is its largest, realized a 12 percent profit gain from recurring activities to 1.47 billion. The opening of the “Maison� on the Champs-Elysées in Paris contributed to this gain, as did the launch on this occasion of the Louis Vuitton's first sunglass collection. Fendi achieved an improvement in its profitability for the year, while Marc Jacobs and Pucci also enjoyed extremely strong performances.

The Perfume and Cosmetics business saw profits increase 15 percent from recurring operations. Parfums Christian Dior did particularly well, continuing to gain market share, especially in Europe and Asia. Guerlain also enjoyed an excellent year.

The Watches and Jewellery division achieved a fivefold rise in profits from recurring operations, thanks to “strong� innovation and the success of its iconic lines. TAG Heuer was the year's absolute winner, although Zenith, Dior Watches and Chaumet also enjoyed strong performances.

LVMH said it was “well positioned� for 2006, and would “pursue its strategy of concentrating on internal growth and the development of its leading brands in 2006�. It added that it would continue to focus on improving profitability as it did last year.

“The financial performance of the group in 2005 shows the effectiveness of a development strategy based on an exceptional portfolio of brands and on the complementary nature and successful geographic balance of its activities,� said group chairman and chief executive Bernard Arnault. “It has enabled LVMH to once again strengthen its position as global leader and to export worldwide its French and European manufactured products. With all these elements in place, 2006 will be another year of strong growth.�

Group net profit climbed from €1.2 billion to €1.4 billion in 2005, although the group had to deal with a €147 million charge related to the closure of its La Samaritaine department store in Paris.