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Arnault Confident in LVMH

America may be sliding into recession and Europe's economies stagnating, but LVMH Moët Hennessy Louis Vuitton boss Bernard Arnault on Thursday said he remains bullish on luxury.

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Bernard Arnault

Bernard Arnault

Photo By DOMINIQUE MAITRE

PARIS — America may be sliding into recession and Europe's economies stagnating, but LVMH Moët Hennessy Louis Vuitton boss Bernard Arnault on Thursday said he remains bullish on luxury.

Arnault told LVMH shareholders at the group's annual meeting here that overall sales in the United States in April were strong — up double digits for Louis Vuitton — and that Asia continued to deliver "exceptional" results.

"We are in a position to meet our objectives for a sharp rise in earnings in 2008," said Arnault, adding overall sales in April were growing in line with the first quarter's double-digit performance.

Despite admitting the current economic environment "isn't the best that we've known" and that the diving value of the dollar and yen was eroding profits, Arnault said LVMH would not stem its aggressive expansion and communications tactics as it tries to grow in a tough environment.

"Every time we've been [in a difficult economy] we've increased market share," said Arnault at the morning meeting here, which was followed later in the afternoon with a Christian Dior shareholders' meeting.

"We've started the year strong. We will not pull off [of the accelerator]," he said. "We are focused on innovating. There are tons of new leather goods — the Richard Prince bag for Vuitton has been an immense success and we won't be able to meet demand. We can't produce the pieces fast enough."

As reported, LVMH's first-quarter sales advanced 12 percent at constant exchange rates to 4 billion euros. After factoring in the negative impact of the strong euro against the dollar and yen, the firm's sales growth was shaved to 5 percent.

Arnault promised shareholders "significant" growth in sales and profits this year and reiterated a pledge to double LVMH's results and size over the next five years.

Projecting an easy and relaxed air, Arnault said LVMH's so-called star brands, including Louis Vuitton, Dior and Tag Heuer, were key to driving further gains this year. He said investments would be focused on bolstering their business.

He also touted the "great potential" for Fendi, which he said in the next years was poised to become "one of the most important Italian brands on the market."
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