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Fashion’s Latest Diet: LVMH Sheds 2 Brands, Other Sales in Pipeline

PARIS — It looks like thin is in for 2003 at LVMH Moët Hennessy Louis Vuitton.WWD has learned that the luxury giant sold the upstart...

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Dossin has been an advocate of restructuring at LVMH. "We believe that current EPS could be boosted by potentially close to 20 percent on a full-year basis, through more restructuring measures," he wrote in a report earlier this week. "This does not include the potential sale of either DFS or Sephora, despite LVMH highlighting earlier this year that these assets are no longer considered strategic. It assumes measures such as further lease negotiations at DFS, closure of flagships at Sephora US, selling some more marginal brands in the cosmetics, fashion and selective retail divisions and continuing to reduce the Treasury shares and financial positions. We therefore believe that the restructuring story still has significant potential."

Terrorism, war in Iraq and a protracted economic crisis in the U.S. are considered among the key risks for the luxury sector. But LVMH said Thursday its objective for 2003 is to deliver "tangible" increases in operating profits despite a challenging outlook.

Although the holiday season was poor for many luxury players, LVMH said fourth-quarter sales advanced 8 percent to $4.11 billion. Fashion and leather goods was the strongest division, with sales up 22 percent based on constant exchange and a stellar performance by the Louis Vuitton brand.

As reported, Vuitton sales were aided by the introduction of new products such as watches, new flagships in Tokyo and Kobe and lusty demand in the U.S., France and Japan over Christmas.

Sales in the perfumes and cosmetics division advanced 5 percent to $2.5 billion. In a release, LVMH credited the launches of Dior Addict and Givenchy Pour Homme for the gains. It also noted that two of its indie brands, BeneFit and Fresh, "continued to grow very satisfactorily."

For retail, LVMH characterized the DFS business as moving "in line with the progressive recovery in global tourism. Sales have started to grow since September, but have not yet returned to the levels of 2000. DFS is continuing to implement its restructuring initiatives and optimize performance." At Sephora, sales grew 9 percent last year, with U.S. comp-store sales up 25 percent.

The watches and jewelry division saw sales inch up 1 percent to $591 million. The firm noted that the cancellation of third-party manufacturing agreements dented the strong growth of sales of Christian Dior watches, notably its "Riva Sparkling" styles, and the TAG Heuer brand.
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