LVMH, Moët Hennessy Louis Vuitton, the world’s leading luxury products group, said on Friday that net profit fell to $8.8 million in 2001 from $635 million a year earlier.
It managed to post a profit due to a gain of $759 million from the sale of its Gucci stake to French retailer Pinault-Printemps-Redoute SA, as part of a settlement of a long-running dispute over control of the fashion house, the company reported.
The company’s jewelry and watch division took in $23.7 million, a drop of more than 50% from the $51.9 million the division earned in 2000. In the fourth quarter, net income was $132 million, a 20% drop from the $164.5 million the company earned during the same period in 2000.
LVMH was weighed down by $676 million in charges for goodwill depreciation and restructuring at its loss-making duty-free retail chain DFS and cosmetics unit Sephora.
The luxury goods sector has suffered from a slump in travel and tourism following the Sept. 11 terrorist attacks in the United States. LVMH said an uncertain economic outlook could persist throughout 2002.
Overall, LVMH’s operating profit fell 20% to $1.37 billion from 1$ 1.72 billion a year earlier.
All business units reported lower operating profit, except for the company’s traditional star performer – fashion and leather goods.
LVMH said the selective retail division – which includes DFS and Sephora – had an operating loss of $176 million in 2001, compared to $1.8 million a year earlier.
Despite the poor economic performance in 2001, the company says the results typify the resiliency in many of its products, particularly in its luxury goods lines.
“This limited slowdown in operating income testifies to the group’s resilience in the difficult economic climate which weighed on the luxury goods market in 2001,” the company said in a statement. “The economic slowdown typified the year for the U.S. and the tragic events of 11th September triggered a sharp decline in global tourism.”