LVMH Moet Hennessy Louis Vuitton SA, the world’s leading luxury products group, said Wednesday its net profit rose 19 percent in the first half of the year as the recovery in travel and tourism boosted its upscale retail outlets.
Net profit rose to $696 million in January through June, the French company said, from $585.45 million last year during the same period—restated under the new International Financial Reporting Standards.
LVMH said operating profit rose 11 percent to $1.36 billion on a 10 percent increase in revenue to $7.69 billion.
Without currency fluctuations, it said, operating profit would have risen 25 percent.
The Watches & Jewelry division continued its recovery, LVMH said. Having broken even in 2004, profit from recurring operations was $17.4 million for the first half of the year. TAG Heuer was the company’s top performer. Meanwhile, Zenith and Chaumet continue to perform well, it said.
During the second half of 2005, Christian Dior will launch its new technically innovative collection, Christal.
The selective retailing division—which includes the DFS and Miami Cruiseline stores based in major cities and luxury travel resorts, as well as perfume and cosmetics chain Sephora—made the biggest contribution to the profit rise. “The rapid increase in tourism is a key growth driver,” the LVMH statement said.
The division’s operating profit surged 70 percent to $148 million $87.38 million, LVMH said, despite the recent closure of La Samaritaine, one of the group’s two flagship Paris department stores, for safety reasons. LVMH said its bottom line was hit by a $183 million charge related to the six-year closure for refurbishment.
Fashion and leather goods, the largest LVMH division, posted a 4.5 percent increase in operating profit to $814 million, the company said, thanks partly to the success of new lines introduced by the flagship Louis Vuitton brand.
LVMH blamed the weaker dollar for the profit decline at the wine and spirits division, which includes Hennessy cognac and champagnes Moet et Chandon, Dom Perignon, Krug and Veuve Cliquot. Operating profit fell 6.4 percent to $400 million.