LVMH Suffers Declines in 2009 Sales and Profits

LVMH Moët Hennessy Louis Vuitton suffered declines in both annual sales and net profit last year, the luxury giant announced Thursday, but nonetheless trumpeted the results as confirming “the soundness of its strategy in 2009.”

The Paris-based prestige products giant did improve its net cash position significantly, in line with the business strategy adopted by practically every fashion and luxury brand in dealing with the current global downturn.

However, LVMH, the planet’s leading luxury products group, saw group sales fall by one percent in 2009 to 17.1 billion Euros, or $23.48 billion at current exchange rates.

Moreover, the group also revealed that its net profit slumped 8 percent to 2.026 billion euros, or $2.78 billion.

LVMH, which is quoted in the Paris Bourse, added that free cash flow increased by 66 percent to 2.205 billion Euros, or $3.027 billion.

The group had to endure sales falls in three of its five main divisions; Wines & Spirits; Perfumes & Cosmetics and Watches & Jewelry. The Fashion & Leather Goods, which includes brands like Louis Vuitton, Marc Jacobs, Givenchy and Loewe, and the Selective Retailing divisions posted modest gains of 2 percent and 1 percent respectively.

Watches & Jewelry 19 percent tumbled to 764 million euros, or $1.049 billion, while Wines & Spirits, encompassing labels like Moet Chandon, Dom Perignon and Veuve Clicquot champagnes plus Hennessy brandy, saw sales nosedive by 14 percent to 2.740 billion euros or $3.760 billion.

Despite the mixed results, LVMH Chairman and CEO Bernard Arnault insisted in a release: “LVMH demonstrated exceptional resilience in 2009. The quality of the products, the powerful appeal of our brands and the reactivity of our organization are the major advantages that made the difference and enabled the Group to win market share. Louis Vuitton in particular delivered another year of growth and has fortified its leading position.”

He argued that the group, of which he is the key shareholder, “is ideally positioned to benefit from the recovery and to continue in 2010 to strengthen its leadership in the global luxury goods sector.”

The Paris Bourse took a more jaundiced view of LVMH’s financial results, selling down the stock 4.3 percent to 77.96 euros, $107, in moderately heavy trading.

In more positive news, Louis Vuitton recorded double-digit revenue growth for the year, while the Wines & Spirits sector took some comfort from the reduction in hefty de-stocking towards the end of the year.

The group also heralded “good resilience” from Parfums Christian Dior,” and Hennessy’s performance, “linked notably to the strong performance in growing markets.”

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