The perfumes and cosmetics division saw sales drop 2.6 percent to $520.8 million, although organic growth totaled 6 percent in the quarter, led by new products and Christian Dior’s skin care line, Capture R60/80.
Positive momentum at Sephora, including 24 percent comp-store sales growth in local currency terms in the U.S., highlighted the selective retailing division, where sales fell 4.5 percent to $798.4 million. Houël said the company would continue to trim expenses at DFS by renegotiating airport concessions and reducing store hours. He added that both chains should break even this year.
Sales in the wines and spirits division fell 10.9 percent to $436.2 million, while watches and jewelry dropped 20.5 percent to $104 million. The results were roughly in line with forecasts.
Antoine Colonna, luxury analyst at Merrill Lynch in Paris, reiterated his buy recommendation on the stock. "Vuitton’s superior organic momentum within the sector is an outstanding achievement…in the face of slower consumer demand and a weak global economy," he wrote in a research note.
Andrew Gowan, luxury analyst at Lehman Bros. in London, warned that trading conditions could deteriorate in the second quarter, depending on the duration of the Iraq conflict and the SARS outbreak, but "we would again reiterate our belief that the impact of these events on the industry will be less than the effect of the terrorist attacks on Sept. 11, due to the lower seasonal importance of the second quarter and the forward planning that many of the companies were able to engage ahead of the well-telegraphed war."
Meanwhile, LVMH said it would continue to focus on its major brands, while "paying close attention to the global economic situation and accelerating the necessary steps to again improve profitability and to gain market share."
LVMH shares rose 3.8 percent Wednesday to close at $42.40 on the Paris Bourse.