LVMH Mo�t Hennessy Louis Vuitton, the world's leading luxury products group, today announced that consolidated sales for the nine months to 30th September 2001 reached 8,661 million Euros, an increase of 10% over the same period last year. In a particularly difficult political and economic environment, sales in the third quarter 2001, following an increase of 38% in the previous year, rose again by 4% to reach 2,975 million Euros.
Following a dynamic start to the quarter, the tragic events which have struck the US have had an impact on some of our activities. Sales in the month of September fell by 8% compared to the previous year (by 4% with constant exchange rates), this weakening of sales in activities directly affected by the attacks being only partially compensated for by strong performances at Sephora, Cognac and in the Japanese market.
Nevertheless, there have been tangible signs of improvement during very recent weeks in those areas most directly affected following the attacks.
Wines and Spirits : Sustained growth of Cognac
Sales of Champagne, down by just 4% over the full quarter, confirm the progressive improvement of stock levels at distribution. France, Germany, the UK and Japan saw palpable improvements, compared to the same period of 2000.
Sales of Cognac remain strong. Volumes were up by 10% in September in the US and Asian countries, particularly China, Taiwan and Hong Kong, enabling LVMH to continue to grow its global market share.
Fashion and Leather Goods : strong demand from local clients.
The Fashion and Leather Goods business group saw sales grow by 11% in the third quarter, following an increase of 46% during the same period of the previous year and despite a decrease of 5% in September. The increasing production capacity of Louis Vuitton Malletier facilitated strong growth in July and August, although this activity was affected very suddenly by the attacks. Since then, however, sales have gradually improved, reaching the same levels as last year in New York, for example and Japan continued to register double digit sales growth. Almost all of the business group's other brands registered double digit growth in the third quarter.
Perfumes and Cosmetics : sound resilience.
The Perfumes and Cosmetics business group continued to grow considerably faster than the market. This performance is based on the success of recent launches (J'Adore by Christian Dior, Flower by Kenzo, Hot Couture by Givenchy, Michael by Michael Kors…) and the very promising début of Christian Dior's male fragrance, Higher. Despite the consequences of events in the US in the third quarter, the business group remains confident about its end-of-year sales levels and anticipates double digit growth for the whole of 2001.
Selective Retailing : acceleration of measures taken to address slowing international travel trends; growth at Sephora.
Activities at DFS have been particularly affected by reduced tourist levels, especially in Hawaii, Guam and Sa�pan, resulting in a significant fall in its sales in September. North American destinations have also been affected by these developments, but Oceania and Korea are showing signs of improvement.
Measures already taken to lower breakeven point have been accelerated and new initiatives have been implemented to improve profitability at DFS, particularly renegotiation of airport concessions and new cost reductions.
Sales at Sephora continued to grow in September, despite a limited impact in certain tourist zones.
Watches and Jewellery : investment for the future.
The evolution of sales in the Watch and Jewellery business group reflects the consequences of terminating certain manufacturing licences that did not conform with the strategy chosen by LVMH for this sector. In this context, Ebel, Zenith, Christian Dior watches and Chaumet continued to grow in September and began to see the benefits of their new strategies and innovative marketing campaigns. Suffering from the repercussions of the international economic climate, sales at TAG Heuer and Fred fell in September.
The dynamism of the Group's star brands, the strength of activities in Japan, reduced interest rates, the benefits of good currency cover, as well as capital gains realised from the disposal of shares, will be positive contributing factors for the group's 2001 results. They reinforce the strength of our long term strategy, which ensures the growth and stability of LVMH.
Nevertheless, the outlook for the short term remains uncertain, with the extent of the economic slowdown and the consequences of events in September still being difficult to anticipate. Since 11th September, we, like businesses in general, have seen a significant slowdown in sales in our stores in the US, Europe and Asia, while the Japanese market remains very promising. In fact, there has been a gradual improvement since the end of September. However, it remains to be seen whether this improvement will continue or if the development of the geopolitical situation will have further negative consequences on the global economy in the short term. Given these conditions, it would be premature to give estimates for full year results today. That said, we are focusing all of our efforts on reaching at least the same level of operating profitability in 2001 as we did in 2000. The Group will use this period to accelerate initiatives aiming to improve profitability, to increase productivity and develop new synergies. By maintaining levels of marketing expenditure, continuing resolutely with its policy for innovation and developing its production capacity in a controlled way, LVMH will be able to strengthen and gain market share, as it has done in previous crises.
With its strong positions, the confidence of its clientele, the talent and motivation of its teams, its world-leading portfolio of luxury brands, its coherent activities and complementary geographic presence, LVMH confirms its target of doubling its sales and operating profit between now and five years time.
“Certain information included in this release is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially. The Company's businesses include its wines and spirits, fashion and leather goods, fragrances and cosmetics, watches, and selective retailing activities, and its outlook is predominantly based on its interpretation of what it considers to be the key economic factors affecting these businesses. Forward-looking statements with regard to the Company's businesses involve a number of important factors that are subject to change, as are mentioned under “Risk Factors” in the Company's Form 20-F for the year ended December 31, 2000 which is on file with the United States Securities and Exchange Commission”.