Group reports restrained purchasing and point of sale closures.
By Kate Doherty
LVMH recorded overall group revenue of €13.7 billion (£11.8bn) in the first half of 2013, an increase of 6% compared to the first half of 2012.
Watches and jewellery at the French luxury good group, which includes Bulgari, Chaumet, De Beers and Fred, were down, however. The group reported a revenue of €1.31 billion (£1.13bn), a fall of 3% compared to the first half of 2012 but up by 1% in terms of organic growth, which takes into account comparable structure and exchange rates.
LVMH linked restrained purchasing by watch retailers to the slow growth in these areas.
In the first half of 2013, LVMH’s watches and jewellery business group recorded organic revenue growth of 1%. Profit from recurring operations decreased by 2% to €156 million (£135m).
In a statement, LVMH said that it had continued with a strategy based on continuing to move further upmarket to enhance the attractiveness of brands to customers.
It described the performance in own stores as "excellent" thanks to the "quality and creativity of new products as well as the strength of iconic lines, particularly in jewellery".
However, the company said that this was offset by restrained purchasing by watch retailers and the voluntary closure of certain multi-brand points of sale, which the report said explains the lower first half growth. The statement said: "We continue to invest in strengthening the quality of our own distribution and the control over our watchmaking and jewellery production."
Overall, LVMH’s organic revenue growth was 8% compared to the same period in 2012. The group continued to perform strongly in the US and Asia, and continues to grow in Europe, in a more difficult economic environment. With organic growth of 9%, the second quarter showed some acceleration compared to the first quarter.
Profit from recurring operations for the first half of 2013 rose to €2.7 billion (£2.3 bn), which was an increase of 2% compared to the same period in 2012. The statement highlighted that this performance compares to the first half of 2012, which showed very strong growth.
Talking about the LVMH results, the group’s chairman and chief executive Bernard Arnault said: “The performance of LVMH in the first half, once again, demonstrates the exceptional appeal of our brands, the attraction of our high quality artisanal products and the relevance of our strategy. Innovation, extreme quality, strong distribution and savoir-faire in all of our businesses reinforce our maisons.
"It is with confidence that we approach the second half of the year and rely on the creativity and quality of our products, as well as the effectiveness of our teams, to pursue further market share gains in our traditional markets as well as in high potential emerging territories.”
In terms of the group’s outlook for 2013, the report said: "Despite an uncertain European economic environment, LVMH will continue to gain market share thanks to the numerous product launches planned before the end of the year and its geographic expansion in promising markets, while continuing to manage costs. Our strategy of focusing on quality across all our activities, combined with the dynamism and unparalleled creativity of our teams, will enable us to reinforce, once again in 2013, LVMH’s global leadership position in luxury goods."