Arnault’s Bet Pays Off: Christian Dior Hits Stride With $36M Profit in ’02

PARIS — Bernard Arnault is expecting another billion-dollar baby — and it’s due in 2006 or 2007.That’s when the Christian...

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Sidney Toledano

Photo By WWD Staff

John Galliano

Photo By WWD Staff

PARIS — Bernard Arnault is expecting another billion-dollar baby — and it’s due in 2006 or 2007.

That’s when the Christian Dior fashion house, the luxury titan’s most beloved property, is projected to reach $1 billion in sales, which would give Arnault fresh boasting rights over competitors attempting rejuvenation miracles.

"Parfums Dior already does in excess of $1 billion. Recent growth trends have also set the fashion company on [track for] the $1 billion target," Arnault told WWD. "The company is bound to double its size in the near future. It is simply a realistic potential for Dior. The first two months of 2003 were very good, driven by consistently strong consumer demand."

What’s more, Arnault stressed that size does matter — especially in terms of profitability.

"At $1 billion, the Dior [fashion house] should be extremely profitable. But Dior is already profitable, and through the major turnaround, it never lost money."

Today, Christian Dior SA is expected to announce operating profits at the Dior fashion house of $36 million, up from a loss of $6 million a year ago. (Dollar figures are converted from euros at current exchange rates.) In tandem, LVMH Moët Hennessy Louis Vuitton is set to announce its 2002 earnings at a news conference this morning. As reported, sales at Christian Dior Couture, which includes the couture, ready-to-wear and accessories business, rocketed 41 percent to $535.6 million last year.

The notoriously bullish Arnault said he remains optimistic looking ahead, despite the specter of a war in Iraq and other troubling economic indicators.

"In wake of the 2002 results, Dior proves its fundamentals are on the right track despite the world economy," he said. "In case the geopolitical climate worsens, contingency plans are ready for implementation, even though we will not question major developments, such as flagship openings and creative investments."

And how. Dior plans to open at least 20 more stores this year, including a $30 million flagship in Tokyo in December.

"The momentum is still here, so we are not slowing down," stressed Dior president Sidney Toledano. "In 2003, I expect a strong double-digit growth rate." He said that the sole concession to tough times is that the company carefully monitored stock levels last year and plans to continue doing so, especially if war breaks out in Iraq. At present, no cuts are planned for its advertising and marketing budgets, he added.
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