LVMH Cashes In On Rising Luxury Goods Demand
By SARAH DiLORENZO
PARIS (AP) â¿¿ French luxury conglomerate LVMH Moet Hennessy Louis Vuitton confirmed Thursday that it's recession-proof: Net profit rose 12 percent last year, as wealthy customers snatched up its Bulgari jewelry and flocked to its luxury malls.
The company behind Givenchy gowns and Louis Vuitton luggage said it pulled in â¿¬3.4 billion ($4.6 billion) in profit in 2012. Revenue rose 19 percent to â¿¬28.1 billion ($38.1 billion), exactly in line with the consensus of analysts surveyed by FactSet.
The market for luxury goods has been nearly impervious to the global economic slowdown, and LVMH has ridden that wave well. CEO Bernard Arnault told analysts on Thursday that they can barely keep their Hennessy cognac in stock, as evidence of the tremendous demand for high-end products."2012 was another remarkable year for LVMH, especially in the context of the economic slowdown in Europe," Arnault said. The company saw revenue growth in all its business groups â¿¿ which include everything from champagne to cosmetics â¿¿ but the largest rise was in jewelry and watches. Arnault attributed that sector's 46 percent increase in sales largely to the acquisition of fine jeweler Bulgari. That sale was completed in 2011. In addition to the strength of the luxury market, the company's sizable presence in several different regions is a large component of its success. Many European companies have struggled as the continent's economy has tanked and unemployment skyrocketed because they were reliant on their home markets for much of their revenue. By contrast, Asia is LVMH's largest market, and it has a sizable U.S. presence also. But even in Europe, LVMH said there was 7 percent organic sales growth; it gave no other sales figures broken down by region. Arnault noted that the company's Europe sales are, in part, propped up by spending by tourists from outside the region.
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