Luxury group reports strong year in 2014 but watch buying weak.
Jewellery sales achieved “remarkable momentum” at LVMH in 2014, which the luxury group dubbed an “excellent year”.
The watches and jewellery division at LVMH posted organic revenue growth of 4% in 2014. However, profits took a 23% year-on-year tumble, dropping to €283 million (£214.1m).
Despite the positive successes of jewellery sales, LVMH said the division was blighted by a poor watch performance, driven by cautious purchasing behaviour of multi-brand watch retailers.
A statement from the group said: “Bulgari recorded strong growth driven by the success of its iconic lines and enhanced its watch collections with its new Lvcea watch for women. TAG Heuer refocused on its core offering, adapting its organisation accordingly. While maintaining tight control, the maisons continued to selectively invest in their distribution network and production capacity.”
Total revenue at LVMH in 2014 was up 6% to €30.64bn (£23.18bn), while profits dipped 5% to €5.72bn (£4.33bn).
LVMH said that the outlook for 2015 is a positive one, despite “a climate of economic, currency and geopolitical uncertainties” with potential for growth across all its business divisions. It said that its main strategy going forward is to continue to invest in quality and innovation in order to position LVMH at the fore of the luxury goods industry.
LVMH chairman and chief executive Bernard Arnault said: “The 2014 results confirm the capacity for LVMH to progress despite economic and currency uncertainty. Revenue and net profit reached new record levels. Commitment to excellence, a passion for quality and our capacity to innovate underpin our growth momentum and are all values epitomised by the Fondation Louis Vuitton and its emblematic building inaugurated in October 2014.
“The year was also marked by the arrival in the Group of Loro Piana, which saw a good performance. LVMH reached an agreement with Hermès and disposed of its stake in this company, in the form of a distribution to our shareholders. In 2014, all our Maisons demonstrated outstanding flexibility. By adapting their strategies to global changes and by continuing to evolve, they have shown the creativity and entrepreneurship that drive them forward. In an uncertain economic environment, we can rely on the desirability of our brands and the agility of our teams to further strengthen our leadership in the world of high quality products.”