Starting from the last year, the mood of most major players in the luxury sector came down to watchful waiting. Consumer spending forecasts remain difficult, and brands try to plan their strategies adapting to the changes taking place in the economic environment, which is becoming ever more challenging.
The only reasonable solution now is to maintain a cautious near-term outlook under global economic conditions and their impact on consumer spending.
Last year, LVMH repeatedly reported an increase in sales, but in the first quarter 2013 the Group said its revenue in the Watches and Jewelry division fell 1 percent to 624 million euros.
LVMH’s revenue growth, which is a barometer in the luxury-goods industry, slowed from the second quarter last year. However, the Group reported a dividend increase of 12% in the first quarter 2013.
The Group continued at the start of the year to perform in line with the trends of the second half of 2012 with strong growth in Asia and the United States, while Europe demonstrates good resistance despite a challenging economic environment.
The Watches and Jewellery business group displayed strong progress in iconic lines and development of industrial capacity. TAG Heuer’s first quarter was marked by the 50th anniversary of its Carrera line and the new partnership with McLaren which was announced at the Geneva Motor Show. Hublot and Zenith also had a good start to the year.
In jewelry, Bulgari “recorded strong revenue growth in its own stores,” largely based on the success of its Serpenti line.
The total revenue of Hublot, Zenith, Chaumet, Fred and De Beers Diamond Jewellers for the 2013 fiscal year increased 6 percent to 6.94 billion euros ($9.07 billion). Organic revenue growth was 7 percent compared to the same period in 2012, which saw a sharp rise.
The group selected some highlights of 2012 which include profit from recurring operations close to 6 billion euros, further market share gains throughout the world, strong momentum and growth in the markets in United States, improved performance, excellent results for TAG Heuer and Bvlgari and free cash flow of €2.5 billion.
Three major concessions were won in 2012 at Hong Kong Airport and the concession at Los Angeles Airport was renewed. The opening in Hong Kong of a third Galleria is also a key highlight of the year. Online revenue is growing strongly. In Europe, new stores opened for the first time in Denmark and Sweden, in Brazil and India where the high potential markets.
Chief Financial Officer Jean-Jacques Guiony added, however, that there had been “some slowdown here and there", particularly in Asia outside China, where there were lower tourist flows this year compared with last year. “All-in-all, we are operating in a tougher environment, but we are reasonably confident for the near future,” Guiony said. According to the statement, the Group will continue to pursue its proactive strategy centered on innovation and targeted geographic expansion in the most promising markets.
Despite an uncertain economic environment in Europe, LVMH is well equipped to continue its growth momentum across all business groups in 2013, the statement says. The Group will maintain a strategy focused on developing its brands by continuing to build up its savoir-faire, as well as through strong innovation and expansion in fast growing markets.
Driven by the agility of its organization, the balance of its different businesses and geographic diversity, LVMH enters 2013 with confidence and has, once again, set an objective of increasing its global leadership position in luxury goods, the company said.
Veronica Novoselova, Rough&Polished
