LVMH Moët Hennessy Louis Vuitton has reported record total revenues of €35.7bn ($38.9bn) for 2015 (+16%) declaring ‘reported increases’ at all five divisions – which all contributed to profits last year, although ‘significant cost containment’ has continued at DFS.

 

Interestingly, LVMH says one of its priorities for DFS this year (2016) is ‘to open new destinations’ – especially in Europe – pointing to a ‘complex situation in Asia penalizing profitability’, although contrasting with a ‘good performance in Japan’ (primarily at its Okinawa Galleria-Ed].

 

LVMH also said that DFS continued to benefit from high spending Chinese tourists last year, while 2016 will also see deployment of its new T Galleria Beauty concept and greater momentum with its reinforced loyalty programme known as LoyalT.

 

RESULTS FROM THE FIVE DIVISIONS:

More broadly, LVMH also reports that its five key divisions in order of sales contributions last year were as follows: Fashion & Leather Goods +14% to €12,369bn ($13,503bn); Selective retailing (Sephora/DFS etc.) +18% to €11,233bn ($12,262bn); Wines & Spirits +16% to €4,603bn ($5,025bn); Perfumes & Cosmetics +15% to €4,517bn ($4,931bn); and Watches & Jewelry +18% to €3,308bn ($3,611bn).

 

LVMH reports that the group’s divisions performed with ’strong momentum in Europe, the United States and Japan’, although ‘other Asian countries demonstrate contrasting tendencies’, with the fourth quarter achieving a reported revenue increase of 12% which also r=translated into +5% organic growth.

 

 

The world’s leading luxurygoods company added that profits from recurring operations reached €6,605m ($7,208m) in 2015 (+16%), ‘to which all business groups contributed’. Group share of net profit was €3,573m ($3,899m). In addition, LVMH said that ‘excluding the capital gain realized in 2014 following the distribution of Hermès shares’, the group share of net profit rose 20%.

 

Commenting on the results, Bernard Arnault, Chairman and CEO of LVMH, said: “The 2015 results confirm the capacity for LVMH to progress and gain market share despite economic and geopolitical uncertainty.

 

“Revenue and operating profit reached new record levels. Commitment to excellence, a passion for quality and our capacity to innovate underpin our growth momentum and are all values epitomised by the Fondation Louis Vuitton and its emblematic building that welcomed over one million visitors in 2015. All our Maisons demonstrated outstanding flexibility in 2015.

 

“By adapting their strategies to global changes and by continuing to evolve, they have shown the creativity and entrepreneurship that drive them forward. In an uncertain economic environment, we can rely on the desirability of our brands and the agility of our teams to further strengthen in 2016 our leadership in the world of high-quality products.”

 

Apart from record revenue and profits, LVMH said last year’s year highlights included strong progress in Europe, the US and Japan, with a positive impact from exchange rates. It also picked out the ‘good performance of Wines & Spirits in all regions’, noting ‘a progressive normalization’ of the situation in China.

 

 

Meanwhile, profits from iconic and new products at Louis Vuitton remained at ‘an exceptional level’, while fashion brands also made progress and here it pointed to Fendi, Céline, Givenchy and Kenzo in particular, plus ‘remarkable momentum’ at Christian Dior where market share increased globally.

 

In addition, LVMH reported ‘excellent results’ at Bvlgari and success with TAG Heuer’s refocusing strategy, while there was also ‘exceptional progress at Sephora’ which LVMH said ‘strengthened its position in all its markets – including the digital platform.

 

‘REMARKABLE YEAR’ FOR LOUIS VUITTON…

As mentioned, the results by division were led by Fashion & Leather Goods with organic revenue growth of 4% in 2015 and reported revenue growth of 14%. LVMH said: “Profit from recurring operations increased by 10%. Louis Vuitton had a remarkable year driven by the enthusiastic welcome of both its iconic products as well as the new models created by Nicolas Ghesquière.

 

“The Cruise Collection shown in Palm Springs and the exhibition at the Grand Palais in Paris retracing the history of the Maison were among the highlights for the year. Fendi recorded exceptional growth with the success of its iconic leather goods and the inauguration of Palazzo Fendi in the centre of Rome.

 

“Loro Piana continued to invest in its production capacity and launched an exceptional new material combining vicuña wool and baby cashmere. Celine’s growth was driven by all its product categories. Givenchy and Kenzo each had a good year. Donna Karan and Marc Jacobs continued to work on changes to their product lines.”

 

 

By contrast, the Selective Retailing division witnessed an ‘excellent performance at Sephora’, although, DFS saw its development ‘impacted by economic changes in Asia’. LVMH commented: “The Selective Retailing business group recorded organic revenue growth of 5%. On a reported basis, revenue growth was 18%. Profit from recurring operations increased by 6%.

 

“Sephora had an exceptional year in terms of revenue and results and continued to gain market share in all its markets. The omni-channel strategy accelerated with numerous initiatives in several countries.

 

‘UNCERTAIN ENVIRONMENT IN ASIA…’

“DFS continues to experience an uncertain environment in Asia, as a result of currency and geopolitical changes, while its business in Japan benefited from a boom in Chinese tourism. Significant cost containment efforts were continued at DFS.”

 

One of the most dynamic divisions at LVMH in recent years has been the Wines & Spirits business group, which is now bigger than the LVMH’s Perfume & Cosmetics division. Last year, Wines & Spirirts recorded an increase in organic revenue of 6% and reported sales growth of 16%, while profit from recurring operations rose by 19%.

 

LVMH said that Champagne experienced good growth in 2015 with ‘an excellent performance in Europe, the US and Japan’, while Hennessy demonstrated strong momentum in the US across all ranges.

 

 

In China, the second half of the year was marked by a rebound in revenue during a year dogged by continued destocking by distributors. Other spirits, Glenmorangie and Belvedere, continued a sustained growth.

 

Turning to Perfumes & Cosmetics, this market also recorded market share gains, while benefiting from ‘successful innovations’, which led to organic revenue growth of 7% and reported sales progress of 15%.

 

DIOR TURNS IN STRONG PERFOMANCE

LVMH commented: “Profit from recurring operations increased by 26%. Christian Dior accelerated its growth and increased worldwide market share. The new men’s fragrance Sauvage experienced unprecedented worldwide success.

 

“The vitality of its iconic perfumes J’adore and Miss Dior – together with the excellent reception of new make-up products – contributed to the Maison’s remarkable performance.

 

“Guerlain demonstrated profitable growth, notably driven by the progress of  L’Homme Idéal and the continued success of the skincare ranges Orchidée Impériale and Abeille Royale. Benefit experienced strong growth driven by the originality of its products. Fresh and Make Up For Ever performed very well.”

 

 

Last, but not least, the Watches & Jewelry division also delivered ‘good growth’ in jewelry, but ‘cautious purchasing behaviour’ from multi-brand watch retailers.

 

This division recorded organic revenue growth of 8% and reported basis sales progress of 19%. Profit from recurring operations increased by 53%. LVMH commented: “Bvlgari had an excellent year driven by its iconic creations and its new Diva and Lvcea collections. Bvlgari’s stores delivered excellent performances”.

 

The company added: “TAG Heuer launched with enormous success its smartwatch developed in partnership with Google and Intel, while continuing to develop its core offering. Given its strong growth, Hublot strengthened its production capacity with the opening of a second manufacturing facility in Nyon, Switzerland.”

 

LVMH ‘CONFIDENT’ FOR 2016…

Looking forward, LVMH points to ‘confidence for 2016’, despite a climate of economic, currency and geopolitical uncertainties. The company says it is ‘well-equipped’ to continue its growth momentum across all business groups in 2016. The ultimate test of its outlook is, of course, reflected in its proposed shareholder dividends.

 

As such, LVMH is to propose a dividend of €3.55 per share (+11%) at the Annual Shareholders’ Meeting on April 14, 2016.

 

This follows the interim dividend of €1.35 per share which was paid out on December 3 of last year. The balance of €2.20 per share will be paid on April 21, 2016.