Bags of promise

24 July 2003

While Louis Vuitton continues to defy gravity, the luxury group lesser brands were hit by the horrible environment. These troubles won t stop LVMH from boosting H1 operating profit 3%. But its diversification strategy raises vexing questions.

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LVMH said that sales in the first half of the year fell by 9.9% to E5.2bn, compared to E5.8bn the year before. The luxury group said that – on a comparable structure and excluding currency effects, sales grew by 1% in the period.

Within that, the group says that its fashion and leather division grew organic sales by 5%. That includes doubledigit growth from the group's star brand Louis Vuitton. Its wine and spirits unit's organic sales also rose by 2%. The other divisions, Perfumes, Watches and Jewellery and Selective retailing all saw organic sales flat to declining.

LVMH said that, despite the contracting sales, operating profit in the first half of the year would be up 3%. That's thanks to cost cutting across the board, the continuing doubledigit growth of LV and a successful hedging policy.

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