LVMH hails strong DFS first-half performance; Hong Kong and Macau buoyant

INTERNATIONAL. Luxury travel retailer DFS Group performed strongly as co-parent LVMH Moët Hennessy Louis Vuitton posted a +10% year-on-year increase in first-half 2018 revenue to €21.8 billion.

The Selective Retailing business group, which includes DFS, posted organic revenue growth of +9% (+15% excluding the closure of DFS concessions at Hong Kong International Airport). Profit from recurring operations was up +39%.

LVMH said: “DFS enjoyed an excellent start to the year. Performance was particularly good in Hong Kong and Macau while its Gallerias, recently opened in Cambodia and Italy, made remarkable progress. The termination of the loss-making Hong Kong International Airport concessions at the end of 2017 contributed to the strong rebound of profitability.”

Mounting a comeback in Macau: LVMH highlighted DFS’ performance in Hong Kong and Macau in particular; T Galleria by DFS, City of Dreams pictured

On the outlook for the rest of 2018, LVMH highlighted the continuing renovation of the DFS flagship Canton Road store in Hong Kong as well as store investment at San Francisco International Airport. It also noted DFS activity “to enhance customer relations and digital marketing”.

At group level organic revenue growth was +12% compared to the same period in 2017 (and +14% when excluding the impact of the termination of the Hong Kong International Airport concessions at the end of 2017.)

In the second quarter, LVMH revenue increased by +11% compared to the same period in 2017, a performance in line with the trends of the beginning of the year, noted the company.

Profit from recurring operations was €,648 million for the first half of 2018, an increase of +28%. Operating margin reached 21.4%, an increase of 2.9 percentage points. Group share of net profit amounted to €3,004 million, an increase of +41%.

The performance of Selective Retailing by revenue and profit in the half (click to enlarge)

LVMH Chairman and CEO Bernard Arnault commented:”The excellent results of the first half of the year attest to the strong desirability of our brands and the effectiveness of our strategy. The performance of the first half is even more remarkable given the unfavorable currency environment. The standards of quality and creativity required from our Maisons, which combine both modernity and tradition, are key to LVMH’s success, always driven by a long-term vision. Despite buoyant global demand, monetary and geopolitical uncertainties remain. In this context, we will stay vigilant and rely on the talent of our teams and the shared entrepreneurial passion to further increase our leadership in the world of high quality products in 2018.”

LVMH performance by business group H1 2018 (click to enlarge)

The Wines & Spirits business group recorded organic revenue growth of +7%. Profit from recurring operations increased by +7%. In the Champagne business, prestige vintages were particularly dynamic, said LVMH, while a firm price increase policy continued. Europe and Japan progressed while the USA was in decline due to a delay in shipments. Hennessy cognac continued to show strong growth in the US market in a tight supply environment; the Chinese market continued to develop rapidly, added the group.

The Fashion & Leather Goods business group recorded organic revenue growth of +15%. Profit from recurring operations was up +27%. The “remarkable growth” at Louis Vuitton continued, it said, while Christian Dior, consolidated since the second half of 2017, had “an excellent performance”.

The Perfumes & Cosmetics business group posted organic revenue growth of +16%. Profit from recurring operations was up +25%. Christian Dior achieved “an outstanding performance”, driven by the fragrances J’adore and Miss Dior, and by the growth of Sauvage. Makeup and skincare progressed strongly, with Guerlain benefiting from the remarkable growth of the Rouge G lipstick and progress in its skincare line, Abeille Royale. Parfums Givenchy maintained its growth in makeup. Benefit enhanced its mascara range and its Brow collection. Fresh, Fenty Beauty and Acqua di Parma grew strongly, noted the company.

The Watches & Jewelry business group recorded organic revenue growth of +16%. Profit from recurring operations was up +46%. Bvlgari grew strongly in jewellery and in the Chinese and American markets. Momentum grew at TAG Heuer, reflected in the innovations of flagship collections Carrera, Aquaracer and Formula 1, and a smaller version of its smart watch. Hublot posted strong growth and benefited from the enhanced visibility of the brand as the Official Timekeeper of the FIFA World Cup, said LVMH.

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