LVMH, the luxury goods group, expects a challenging first half due to a faltering economic recovery in Japan, according to its chairman Bernard Arnault.
Although he confirmed the group's targets for double-digit growth in sales and operating profit this year, LVMH shares fell 7 per cent to Euros 64.90. They have now fallen nearly 35 per cent from their 12-month peak, underperforming competitors such as Gucci, Hermés and Bulgari, against the backdrop of a slowing US economy and worries about the group's exposure to Japanese consumers.
“We are maintaining our target for double-digit growth in turnover and operating profit,” Mr Arnault told LVMH's annual meeting. “This is an objective, not an undertaking nor a forecast. The economic environment can intervene negatively.”
Mr Arnault said the first half of 2001 would be more difficult because of the weak yen and sluggish consumption in Asia.
LVMH also announced a global employee stock option plan for 44,000 employees in 53 countries. Eligible employees will be granted 25 stock options at a unit price of Euros 66.
Now that it has nearly completed its purchase of Donna Karan, LVMH is expected to focus on improving its own organic growth. Sales in the first quarter rose 12 per cent to Euros 2.75bn.
Mr Arnault also repeated his call for Pinault Printemps Redoute, the French distribution group, to launch a full bid for rival fashion house Gucci, in which PPR currently holds about 42 per cent against LVMH's 20 per cent stake.
