LVMH, Moet Hennessy Louis Vuitton, the world's leading luxury products group, today announced that consolidated sales for year ended 31 December 2001 increased 5% to reach a record 12.2 billion Euros. This growth, following the 35% increase in 2000, was even more remarkable for being achieved in a challenging economic and political environment.
Sales in the fourth quarter declined by 4% following a dramatic decline in travel related sales as a result of the September 11 tragedies and the growing weakness of the yen. There was however progressive improvement during the quarter. October sales were – 6% versus year ago, November – 5% and December 2001 matched the record levels of last year. While tourist-driven markets were weak, sales to local consumers in the U. 5., Western Europe and Japan continued to grow.
Commenting on these results, Toni Belloni, Group Managing Director, said: �In 2001, LVMH reinforced its market position within a deteriorating economic environment, despite the slowdown in travel which affected all luxury goods markets. The logic of our strategy was seen in our fourth quarter performance; once again our exceptional portfolio of star brands showed itself to be a unique and valuable asset, strengthening us in times of crisis and achieving gains in market share. Best examples are Louis Vuitton, Hennessy, Parfums Christian Dior, driven by innovation as well as an uncompromising commitment to high quality products and services, which our customers value so highly. �2001 also demonstrated the value of our entrepreneurial teams and philosophy. We have adjusted quickly to a changing environment to maintain the competitiveness of our brands. The depth of our management talent and our enriched stable of great brands make us confident that we are well positioned to strengthen our leadership in the global market for luxury goods.�
Annual sales of the Wines & Spirits business group were 2.2 billion Euros, a decrease of 4% compared to 2000.
Annual sales volumes of Champagne declined by 7% as high customer stock s were progressively reduced in the key U.S. market. With indications at end that stock levels at distributors have returned to normal, volumes are expected to improve in 2002. In the last quarter, wine sales were affected by the Argentinean crisis.
Annual Cognac sales volumes increased by 6% compared to 2000. This was due strong performance of Hennessy whose growth in the U. S. compensated for continuation of the long term decline in Japan. The potential of emerging countries, such as Eastern Europe, Korea and China, as well as satisfactory levels of stock in December are #very encouraging signs far the health of this business.
Annual sales in the Perfumes & Cosmetics business group increased by a strong 8% compared to 2000 to 2.2 billion Euros, while the global market creased by around 3%. This increase is due to the creative success of new products. This is true of our key brands, Christian Dior, which introduced J'adore, Higher and Addict, Kenzo with Flower, and the successful U. S. lounches of Michael by Michael Kors and Marc Jacobs as well as the on-going deve1opment of BeneFit and Bliss. Advertising and promotion expenses were maintained in order to assure a continuation of the strong performance in 2002 for the fourth consecutive year.
Income from operations for 2001 is estimated to be 1.560 billion Euro., This is due mainly to the impact of the tragic events of September on the luxury goods with the brutal and immediate slowdown of travel that ensued; the weakening of the yen and the effects of the Argentinean crisis further accentuated this trend.
We expect the market environment to remain difficult in the first half of 2002.
As previous crises, LVMH will continue to pursue its long-term strategy focusing on the development of its �star� brands and on productivity. Sales and our market share are expected to grow reflecting organic progress and the integration of new power brands such as Donna Karan and Fendi. Operating income is expected to rebound materially in 2002.