LVMH Moët Hennessy Louis Vuitton has reported a 4% rise in Q1 2014 revenue to €7.2bn ($9.9bn) with DFS performing strongly despite lower Japanese spending.
The Selective Retailing division – principally DFS and Sephora – is fast catching up with the traditional leading division of Fashion & Leather Goods within LVMH.
The Selective Division’s organic revenue growth stood at 10% in the first quarter of 2014, with DFS performing well thanks to ongoing growth in Asian tourism which helped compensate for lower spending by Japanese tourists with their weaker yen.
LVMH said that DFS also benefited from strong business gains in Macao and Hong Kong – its two most important destinations – and this was aided significantly by ‘the excellent start to the year of the Hong Kong International airport concessions’.
The luxury goods giant also pointed to market share gains by Sephora ‘in all regions’, with progress said to be ‘particularly rapid in Asia, the Middle East as well as North America’, where in the latter market online sales grew strongly.
Looking at revenues by other business divisions, LVMH said that the Wines & Spirits business group recorded a decrease in organic revenue of 3% in Q1 2014, a trend explained by the performance of Cognac in China, linked to current destocking by retailers.
COGNAC SHOWS RESILIENCE
The company said: “However, its dynamic presence in certain segments of the Chinese market and its solid growth in the United States contributed to the resilience of Cognac in the quarter. Other spirits, Glenmorangie and Belvedere, recorded good growth in volumes. Champagne experienced a good start to the year. The prestige vintages, in particular, recorded strong growth”.
Moving on to the biggest division at present, LVMH said: “The Fashion & Leather Goods business group recorded organic revenue growth of 9% in the first quarter of 2014. Louis Vuitton was propelled by a strong creative momentum. The first show of its new artistic director, Nicolas Ghesquière, was enthusiastically received.
“New models in the iconic Monogram line were very successful, while the leather lines continue their development. Other fashion brands continue to grow. The quarter was marked by the opening of flagship stores in Münich for Fendi and in London for Céline. Loro Piana, whose activity is consolidated for the first time this quarter, delivered a remarkable performance.
“In Perfumes & Cosmetics, organic revenue growth was 5% in the first quarter of 2014. Christian Dior continued to benefit from the excellent dynamics of its iconic perfumes J’adore and Miss Dior. Make-up also contributed to the good performance of the Maison.
“Guerlain successfully rolled out its high-end skincare range, Abeille Royale, in Asia. La Petite Robe Noire fragrance goes from success to success. Benefit continued its rapid progress around the world, supported by its innovative product lines, and Fresh expanded rapidly.”
BOUTIQUE BUSINESS ‘GOOD’
Turning to its Watches & Jewelry business group, LVMH said that organic revenue growth of 5% was recorded in Q1 2014 with the results from group-owned boutiques ‘good’.
The company also pointed to the numerous innovations at TAG Heuer, Hublot and Zenith as presented at the World Watch and Jewelry Show in Basel, which it said were received warmly from distributors. Bulgari also celebrated its 130th anniversary with the opening of its renovated flagship boutique in Rome’s Via dei Condotti.
Commenting on the trading environment in general, LVMH said: “In an economic environment which remains uncertain in Europe, LVMH will continue to focus its efforts on developing its brands, will maintain a strict control over costs and will target its investments on the quality, the excellence and the innovation of its products and their distribution.
“The Group will rely on the talent and the motivation of its teams, the diversification of its businesses and the good geographical balance of its revenue to increase, once again in 2014, its leadership of the global high quality goods market.”
[DFS’ relatively new operation at Hong Kong International Airport is said to have contributed strongly to LVMH Q1 ‘sales’ results].