Showing posts with label profits. Show all posts
Showing posts with label profits. Show all posts
LVMH Sees Big Profits, Dior Gains Despite Galliano’s Demise
LVMH Moët Hennessy Louis Vuitton has recorded significant revenue gains for the first half of 2011.
The world’s largest luxury conglomerate saw revenue of €10.3 billion ($14.9 billion) in the first half of 2011, up 13% from last year. Profits were €2.2 billion, up 22% from 2010.
Bernard Arnault, chairman and CEO of LVMH, credited strong brand appeal, consumer attraction to artisanal products and simple business strategy with prompting the growth.
“The first half was marked by the agreement with the Bulgari family to strengthen the long-term growth of the famous Italian Maison,” Arnault said in a press statement. “We approach the second half of the year … relying upon the creativity and quality of our products as well as the effectiveness of our teams to pursue further market share gains” in both historical and emerging markets.
It has been a busy six months for LVMH, which recently acquired a majority stake in Bulgari, faced opposition in buying part of Hermès, opened dozens of stores worldwide, acquired 70% of Ali Hewson’s Nude Skincare, and fought critics of its planned Frank Gehry art museum in Paris, among other projects.
Perhaps the most notable part of the company’s half-year report was the redoubled strength of Dior despite the scandal surrounding John Galliano’s exit and the poor reviews its fall-winter 2011-2012 haute couture collection received. LVMH reported “robust growth” and a gain in market share for the 65-year-old brand.
Luca Solca, a retail analyst at Sanford C. Bernstein in Zurich, had predicted that Galliano’s departure wouldn’t greatly affect its financial stability.
“Galliano designs the Dior catwalk collection, but the commercial relevance of that collection is very low,” Solca said.
In all, fashion and leather goods registered a 14% jump in organic revenue in the first half of 2011, with Céline in particular generating extraordinary demand.
Performance-wise, though, the shining star in Arnault’s crown is Louis Vuitton. It has seen double-digit organic revenue growth and a high level of profitability so far this year.
Vuitton’s first-ever participation in the Basel watch fair and the opening of a new leather goods workshop in Marsaz, France, likely aided its growth; Arnault has also said Vuitton is aided by the fact that it is the only luxury brand to sell exclusively within its own store network.
All told, the biggest gains for LVMH came in the watches and jewelry group, which saw a 27% jump in revenue over last year. TAG Heuer (with a new automatic chronograph made with the 1887 Calibre movement and the opening of TAG Heuer stores), Hublot (the King Power line with new Unico movements) and Dior (launch of the Dior VIII watch) saw large jumps in sales.
source
Hermès reported 55% net profits increase in first 6 months of 2010
hermès fall winter 2010 / reuters pictures
French luxury house Hermès yesterday released their financial results for the first 6 months of 2010. here are some brief points, and some of my thoughts:
- sales increased by 23% as compared to 2009: europe up 17%, US region up 26%, asia up 45%. however japan was down 2% (was it because of lady gaga defacing the birkin bags at narita airport??).- leather goods, being their core business reported 23% increase in sales.- net profit came in at 55% increase. assuming there wasn't anything exceptional in 2009 distorting comparisons, they must have controlled their costs very tightly, considering sales were up 20-odd %. they created 116 new jobs this year (more costs), hence savings must have been made elsewhere and not on the payroll. more fabric bags perhaps?
- they don't expect similar results for the second half of the year: they targeted a 12% increase in sales, barring any exceptional market conditions. hermès did pretty well in second half of last year, especially when the markets were picking up. hence in percentage terms a 12% increase, when the economy is still recovering, looks decent to me.

source: yahoo.com
- share price in hermès increased 53% in 2010. during the financial crisis, we saw many retailers going into liquidation, closing stores, downsizing etc. it seems rational to assume that the luxury goods companies would suffer, crash and burn in that crisis. like the other industries, times like these test the leadership capabilities, how well they steer their ship. i still firmly believe that within the retail industry, fast affordable fashion and the top tier true luxury firms would survive and indeed do well. those in the middle tier pricing are just too wishy washy.

- silks and textiles reported a 17% increase in sales. speaking of silks, deluxeduck alerted me to the new 140cm x 140cm silk scarf as seen on above fall winter 2010 advertising campaign. "hurray!" i shouted to myself, finally a silk scarf big enough for men to drape nonchalantly on their shoulders. but the large format silk scarves retail at GBP510.
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