LVMH scores 15% increase in annual sales to €53.7 billion, Bernard Arnault predicts profitable 2020
LVMH, the world’s largest luxury group, posted yet another year of record sales, racking up global turnover of €53.7 billion in 2020, a 15% increase on the previous year.
Calculated on an organic basis, the mammoth French company said sales had risen by 10%, the group announced Tuesday evening in Paris.
However, harmed in part by events in Hong Kong, sales in the final quarter grew by 12%. Profit from recurring items also grew 15% to €11.5 billion, while the operating margin reached 21.4%. And group share of net profit amounted to €7.2 billion, up 13%.
"LVMH had another record year, both in terms of revenue and results. The desirability of our brands, and creativity and quality of our products, the unique experience of offered to our customers, and the talent and commitment of our teams are the group’s strength and once again made the difference," said CEO and controlling shareholder Bernard Arnault in a presentation inside LVMH headquarters on avenue Montaigne in Paris.
Looking ahead, Arnault noted, "For 2020, I think like in other years, the conjuncture will be profitable… But there is always the possibility of a financial crisis especially when interest rates are nearly zero… one day there will have be a readjustment."
Prior to the conference, LVMH announced that it had pledged 16 million renminbi (€2 million) to the Chinese Red Cross Foundation to help fund medical supplies in Wuhan.
Asked about his thoughts on the pathogen, Arnault responded, "It’s very early to have a response on what effect this will have. That said, apparently this virus is a little less aggressive than that of SARS in Hong Kong. Also, the government of China has reacted extremely strongly and their efficacy in the struggle against the epidemic should have a great impact. We have the impression that this epidemic should be well under control by mid-March. But I only say what I read."
Breaking down sales by product category, LVMHʼs key sector, Fashion & Leather Goods, scored a 20% advance in sales to €18.455 billion: over one third of LVMH turnover, and three times the size of Perfumes & Cosmetics at €6.092 billion. Wines & Spirits stood at €5.143 billion and Watches & Jewelry at €4.123 billion. The luxury conglomerate’s second largest division is Selective Retailing, which scored €13.646 billion in sales.
Speaking from a rostrum in front of 300 analysts, press and senior executives, Arnault raved about the "great success" of both Louis Vuitton’s designers, Nicholas Ghesquière and Virgil Abloh, the brand’s growing store network and special LV Maisons.
"Vuitton is now easily the premium marque of luxury in the world. We carefully opened two new factories in France and the USA and they still are not enough to satisfy demand," he bragged, speaking in French.
Turning to LVMHʼs "second fashion brand" Christian Dior, he underlined the historic success of its exhibition in London, "Christian Dior: Designer of Dreams" which attracted over 600,000 visitors. And praised the success of both designers Kim Jones and Maria Grazia Chiuri. "Both are excellent," he smiled.
At Fendi, he lamented the sad passing of its historic designer Karl Lagerfeld, while at Loewe, he hailed its designer Jonathan Anderson as "extremely talented, which has meant that Loewe has had year after year of remarkable growth."
Finally, he had positive words for Berluti for making "great menswear" and Rimowa for its "remarkable growth since we acquire it," bringing smiles to the faces of their two CEOs, his two eldest sons Antoine and Alexandre.
Back in November, LVMH took over Tiffany & Co, the US jeweler famed for its engagement rings and white diamond necklaces, in a $16.2bn (€14.7 billion) deal.The all-cash deal marked the biggest-ever takeover for LVMH chairman Bernard Arnault - Europe's richest person - as he challenges Cartier owner Richemont for dominance in the global jewellery business. Despite the huge acquisition, LVMH cash flow got better. And, remarkably, adjusted net debt is just 16.2%.
Referring to that deal, Arnault mentioned Bulgari, its largest watch and jewelry brand, noting that since LVMH bought that Italian brand in 2011 it had more than doubled sales and quintupled profits. "If the same thing happens with Tiffany we will have done a very good job," he insisted.
Taking questions from the floor, he defended the brand’s problem child in the USA, Marc Jacobs.
"There has been a real improvement. We have launched a new perfume, which is magnificent. And Marc is working very hard with a new management team."
However, he brushed aside a question from an Italian journalist on whether LVMH would buy the AC Milan football team.
˝This whole story is a real mystery. Milan is a formidable club with extraordinary players. But this must be the sixth or seventh time I have been asked this question. And I repeat: we have not the least interest in this club!"
And, he waved aside a further Italian question that LVMH was looking at buying Prada.
˝The Italian press does really write a lot. Huh!˝ he sniffed.
Turning to the web, he was dismissed any suggestion that LVMH had not been successful in the Internet, which accounts for a tiny percentage of global sales.
˝I am a little skeptical about luxury on the web. You know, when you look at these big fashion sites they are all losing money. So, we develop more modestly and we try to find a way to make money,˝ he responded.
LVMH owns some 75 brands, a remarkable string of marques that includes Christian Dior, Louis Vuitton, Givenchy, Hennessy, Bulgari, TAG Heuer, Guerlain, Dom Perignon, Veuve Clicquot and Sephora.
Arnault also defended LVMHʼs joint venture with Rihanna which has gotten off to a slow start according to retailers. Quizzed by FashionNetwork.com on rumors that LVMH was mulling a bid for TechWorld, the company which partners with Rihanna in her giant and rapidly growing lingerie business Savage X Fenty, Arnault would only say, ˝Itʼs a brand new fashion house, so let’s give Rihanna some time.˝
In Beauty & Cosmetics, he underlined the "excellent momentum" of Dior iconic lines and the "rapid progress" of Prestige Skincare.
˝I have even tried it myself and its really very good,˝ he said, causing a ripple of laughter.
Finally, turning to Watches & Jewelry, he seemed particularly pleased with Chaumet, especially its series Bee My Love, which he bragged – for once in English – ˝is out of stock!˝
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