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PARIS – LVMH Moët Hennessy Louis said that net profit decreased by 22 percent in the first half, since the most important department for the important fashion and leather goods missed expectations and underlined the pressure of a large number of detailed designers in the most important houses in the group.
The luxury conglomerate, which has more than 75 brands, including Louis Vuitton, Dior, Tiffany & Co. and Sephora, said that net profit was 5.70 billion euros in the first six months, which has slightly exceeded the analysts forecasts.
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The profit from recurring business activity decreased by 15 percent to EUR 9.01 billion, which corresponded to a operating range of 22.6 percent. This was over a visible alpha consensus forecast of 8.87 billion euros.
However, the department for fashion and leather goods was worse than expected, with a decline in the organic turnover by 9 percent in the second quarter compared to a decline of 7 percent by 7 percent, which indicates that the sector leader Louis Vuitton and Dior remain in the lull against the background of anemic demand, a weak euro and the threat of US trade tariffs.
The group revenue decreased by 7 percent to 19.50 billion euros in the three months to June 30, which corresponds to a decline of 4 percent organic conditions.
“LVMH showed solidity in the current context,” said Bernard Arnault, chairman and Chief Executive Officer from LVMH.
“In addition to the long -term vision that our family group always led, we are concentrated beyond the prevailing uncertainties,” he added. “We go into the second half of the year with great vigilance and I am confident that LVMH’s enormous long -term potential and the commitment of our teams will further strengthen the group’s management position in luxury goods.”
Wines and spirits together with fashion and leather goods were the two segments with the largest decline in operating profit, which was 33 percent or 18 percent.
In terms of income, watches and jewelry came a little better than expected in the second quarter. Perfums and cosmetics agreed with forecasts with an increase of 1 percent, while wines and spirits were better than expected, while selective retail also exceeded forecasts with an increase of 4 percent.
The analysts had hoped that fashion and leather goods would exceed consensus estimates after encouragement results at Burberry, which exceeded expectations with a decline in sales in the same business in the three months to June 30th and Compagnie Financière Richemont, which corresponded to an increase in total sales in the period.
