INTERNATIONAL. DFS Group, the world’s leading travel retailer, performed well in 2007, parent company LVMH Moët Hennessy Louis Vuitton revealed today.
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Chinese strategy and luxury sector drive DFS forward Click the Podcast icon for reaction to the LVMH results and an excerpt from today’s conference call with analysts and reporters To download: right click on the Podcast icon and select ‘Save Target As’ option Click here for more information, instructions and previous Podcasts |
The company’s Selective Retailing division, which includes DFS, Miami Cruiseline, Le Bon Marché and perfumery chain Sephora, posted a +7% rise in revenues to €4,179 million (up by +12% organically). This was particularly notable given that much of DFS’s business was impacted by the soft US Dollar, the group noted. Selective Retailing posted a +10% increase in its profit from recurring operations for the period.
“With DFS the Chinese traveller is gradually replacing the slow-down of Japanese travellers affected by the decline in the Yen,” said the company during a conference call. “For Selective Retailing we have a good outlook at the end of the year. The first half saw a slowdown in Japanese tourism but it was looking much better by the end of the year.”
DFS Group’s business in Hong Kong is understood to be thriving, thanks to the growth in Mainland Chinese footfall and spend. LVMH said: “DFS is continuing to grow its market share in Asia against a backdrop of lower spending by Japanese travellers and a weak Yen. The growth in DFS is driven by an increase in Chinese travellers and new plans for Macau and opening the [joint venture] business in Vietnam in the final quarter [of 2007]. These are major growth drivers going forward. Tourist flows to these two destinations are growing strongly.
“Equally strategic is to ensure that our product offering is tailored to a more varied range of customers in terms of their geographic origins and greater sophistication. Over 80% of DFS sales are derived from luxury products and we have customised services that are being developed.
“For 2008 DFS will remain focused on maintaining its leadership in Asia. The extension of the Gallerias in Hong Kong – a rapidly growing market – is under way. The new concession in Mumbai, which opens next week, marks the beginning of a history with the Indian market that we hope will be long and full of opportunities.”
The spokesman said the ambitious opening of the DFS Galleria at the Four Seasons in Macau in June “will drive the growth of DFS with Chinese clientele.” He added: “It will offer a very broad range with all the most prestigious brands and a new concept for DFS.” And the company revealed that it is working on a second project for Macau, “an opportunity that should become a reality in 2009”.
| LVMH Revenue By Business Group 2007 | ||||
EUROS (MILLIONS) | 2006 | 2007 | Variation | |
Reported | Organic | |||
| Wines & Spirits | 2,994 | 3,226 | +8% | +13% |
| Fashion & Leather Goods | 5,222 | 5,628 | +8% | +14% |
| Perfumes & Cosmetics | 2,519 | 2,731 | +8% | +12% |
| Watches & Jewellery | 737 | 833 | +13% | +19% |
| Selective Retailing | 3,891 | 4,179 | +7% | +12% |
| Other Activities & Eliminations | (57) | (116) | N/A | N/A |
| Total | 15,306 | 16,481 | +8% | +13% |
Miami Cruiseline also strengthened its position, LVMH said, with both revenue and profitability increasing. The company, which holds a powerful position in the cruise market, opened a number of new retail spaces on ships. And, like DFS, it moved upmarket. “The increasingly high-end positioning of its boutiques and the efforts made to adapt its product offer to the customers of various cruise lines remain priorities and continued to yield results,” said LVMH.
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DFS Group’s relentless upscale push, especially at its Gallerias, now sees luxury account for a remarkable 80% of sales |
LVMH, the world’s leading luxury products group, recorded 2007 profit from recurring operations of €3,555 million, an increase of +12% compared to an already strong performance in 2006.
The current operating margin again improved, reaching 22% in 2007. Revenue rose to €16.5 billion, reflecting organic growth of +13% to which all business groups and all regions contributed.
LVMH said its performance was even more noteworthy in view of the strong negative impact of exchange rates, which mainly affected the second half of the year. At constant exchange rates, profit from recurring operations increased by +20% in 2007.
LVMH Chairman and CEO Bernard Arnault commented: “The excellent performance in 2007 illustrates the vitality of our major brands which continue to strengthen and gain market share. The year also confirmed the strong potential of our high growth rising star brands and the Group’s leading position in emerging markets.
“LVMH has showed record revenue in 2007 and has once again improved profitability. In an economic environment unsettled since the beginning of the year, we will rely on the strength of our growth model, the exceptional innovation of our brands and the talent of our teams to make 2008 another year of growth.”
The company said: “Following an excellent 2007, LVMH is well positioned for 2008. The Group will continue its strategy of concentrating on internal growth and the development of its leading brands. LVMH has set itself an objective of a tangible growth in its results for 2008.
“The geographical spread of its activities, the strength and the complementarity of its brands and the exceptional talent of its teams will enable the Group to gain market share and to further strengthen its lead in the global luxury goods market.”
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