From Your Personal Shopper in Paris: LVMH, 22% increase in revenue for the first nine months of 2012

LVMH Moët Hennessy Louis Vuitton,  recorded revenue of €19.9 billion for the first nine months of 2012, an increase of 22% on the comparable period in 2011. After taking into account the consolidation of Bulgari, as of 30 June 2011, and a positive currency impact, organic revenue grew by 10%.

The Group recorded a 15% rise in revenue for the third quarter. Organic revenue growth was 6%, a solid result in the current economic environment, particularly when compared to the strong performance in the same period of 2011. The US market continued to demonstrate momentum. In spite of a challenging economic environment, Europe and Asia also contributed to the third quarter performance. Louis Vuitton continues to gain market share throughout the world.

The Wines & Spirits business group recorded organic revenue growth of 12% for the first nine months of 2012. The Group’s champagne brands achieved a sustained increase in volume over the period. An improvement in product mix and the price increases announced at the start of the year also contributed to the progress made by the Champagne business. All geographic regions recorded increases with particularly strong advances in emerging markets. The Wine business benefitted from the rapid development of sparkling wines. Hennessy cognac continued to see strong momentum across all categories.

The Fashion & Leather Goods business group recorded organic revenue growth of 8% for the first nine months of the year. Louis Vuitton reported a double-digit rise in revenue, driven by the powerful appeal of its products and the unique experience offered to all clients at its stores, and further reinforcing its advance on the global market. The Shanghai opening of the first Maison Louis Vuitton in China and the launch of a number of collections in collaboration with the artist Yayoi Kusama marked some of the high points of the quarter. Celine achieved remarkably strong performance across all its markets and product ranges. Fendi undertook a targeted expansion of its distribution network. All other fashion brands continued to show improved performance.

The Perfumes & Cosmetics business group registered organic revenue growth of 8% for the first nine months of 2012. Christian Dior continued to show strong momentum underpinned by the growth of its iconic perfumes and the relaunch of Dior Addict, backed by a new publicity campaign. The makeup and skincare segments also contributed to the strong performance thanks to the Prestige range and the new Diorskin Nude products. Guerlain benefitted from the successful launch of La Petite Robe Noire and solid progress with its Orchidée Impériale skincare products. Givenchy benefitted from broadened distribution of its makeup range. Benefit continues to achieve strong growth thanks to its They’re Real mascara. Fresh opened its first store in the Chinese market.

The Watches & Jewelry business group recorded organic revenue growth of 7% for the first nine months of 2012. LVMH’s watch brands made further progress driven by their iconic ranges and innovation. The launch of TAG Heuer’s new Link Lady and Zenith’s Pilot range were among the highlights for the quarter. In Jewelry, the success of Bulgari’s Serpenti and B.Zero1 collections was confirmed as the brand pursued a very selective distribution strategy. Chaumet and Fred delivered good performance in their own boutiques.

The Selective Retailing business group achieved organic revenue growth of 14% for the first nine months of 2012. DFS continued to expand its presence in Hong Kong with the opening of its third Galleria in the city centre and establishing three new concessions at the airport which will be operational at the year-end. Sephora produced a remarkably strong performance, winning market share across all regions of the world. Its growth momentum remains strong with, notably, significant progress being made in China and Russia and the considerable success of its first store opening in Brazil. On-line sales in France and the United States saw particularly strong gains.

Outlook

Despite the background of an economic slowdown in Europe, LVMH remains confident in its outlook for 2012. The Group will continue to pursue its proactive strategy centered on innovation and targeted geographic expansion in the most promising markets. LVMH will rely on the power of its brands and the talent of its teams to further extend, in 2012, its global leadership position in luxury products.

From Your Personal Shopper in Milan: PRADA and the Emerging Markets

Italian fashion house Prada is planning to open 260 stores in the next three years to capture consumers in emerging markets who are hungry for luxury goods, a report says.

The Milan company, which owns Miu Miu and Church’s in addition to its marquee Prada brand, is planning fresh outlets in countries such as Turkey, China and Brazil, according to Bloomberg.

Prada Chief Executive Patrizio Bertelli  told Bloomberg that the company will add 100 new stores this year and 160 stores the following two years.

“We are expanding in Morocco, Istanbul, Beirut, Dubai and Qatar,” Bertelli said. “Brazil is also a big market we’re looking at.”

From Your Personal Shopper in London: Burberry’s second half sales up 18%

The increase was driven by strong sales in Britain, France and China, and the company said it was positive on the year ahead.

The 156-year-old seller of raincoats and leather goods reported total revenues of £1.027 billion sterling for the six months to the end of March.

This was in line with analysts’ average forecasts of £1.03 billion.

The company said retail revenues, which now account for 72% of group sales, rose almost a quarter to £743m and that the outlook was good.

Wholesale and licensing sales rose 7% and 5% in the second half of the year, respectively.

Angela Ahrendts, Chief Executive Officer, commented:

“With underlying revenue up 18% in the second half, we are pleased with Burberry’s finish to the year across all channels, regions and product divisions. Looking ahead, while we remain vigilant about the external environment, our global teams continue to focus on optimising our core brand, digital and cultural initiatives, while investing to drive sustainable, profitable growth.”

Retail

Retail sales, which accounted for 72% of total revenue in the second half, grew by 23% on an underlying basis (up 25% at reported FX).

Comparable store sales in the half increased by 12% (Q3: +13%; Q4: +11%). The UK, France and Greater China remained strong, especially in flagship markets. In mainline, average retail selling price was again the key driver of sales growth, helped by greater penetration of Burberry London in both women’s and men’s apparel. Knitwear, men’s tailoring and accessories grew strongly, as did fragrance and watches.

During the second half, Burberry opened 11 mainline stores and closed six. Openings included an 11,000 square foot store in Taipei, the first flagship in this market, an 8,000 square foot flagship in Paris, a third store in Brazil and a second in Mexico. Average retail selling space for the second half increased by 13%.

Wholesale

Wholesale revenue in the second half increased by 7% at constant and reported FX, compared to guidance of mid single-digit percentage growth. Growth was impacted by the planned shift from wholesale to retail in Saudi Arabia and Spain and further rationalisation of the brand’s distribution in the United States and Europe.

Excluding these actions, there was double-digit percentage growth in Emerging Markets, Asia Travel Retail and US department stores, driven by brand momentum and new dedicated shop-in-shops. Core outerwear and large leather goods performed solidly, helped by replenishment.

Licensing

Total licensing revenue in the second half increased by 5% on an underlying basis (up 10% at reported FX), consistent with full year guidance. Japanese licence income was slightly down in the half, largely reflecting the planned termination of certain non-apparel licences. There was excellent growth from the three global product licences (fragrance, watches and eyewear), led by the new Burberry Body fragrance and current season watch collections.

Discussions continue between Burberry and Interparfums regarding the potential establishment of a new operating model for the Burberry fragrance and beauty business.

Outlook

Retail: In the year to 31 March 2013, Burberry plans a 12-14% increase in average retail selling space, with a shift from smaller to larger stores, especially in flagship markets. Burberry expects to open about a net 15 mainline stores, biased towards Emerging Markets and cities with high tourist inflows.

Wholesale: In the six months to 30 September 2012, Burberry projects underlying wholesale revenue to increase by a mid single-digit percentage. Despite further rationalisation of the brand’s distribution in both Europe and the United States, double-digit percentage growth is again expected in key US department store doors, Emerging Markets and Asia Travel Retail.

Licensing: In the year to 31 March 2013, Burberry expects licensing revenue at constant and reported exchange rates to be broadly unchanged year-on-year. The global product licences are again expected to deliver double-digit percentage growth. This will be offset by the planned termination and downsizing of Japanese non-apparel licences.