LVMH loses fizz as wine sales drop
LVMH, the biggest player in the luxury goods market, yesterday reported a 23 per cent slump in first half profits as the downturn hit discretionary spending.
The group, which owns the Dom Perignon brand, was dragged down by its wines and spirits division which suffered a record 41 per cent drop in profits as champagne revenue was hurt by high stock levels at distributors.
Profits from recurring operations dropped to €1.36bn (£1.17bn), down from €1.54bn a year earlier.
Charles Stanley analyst Sam Hart said: “Corporate related spending on champagnes and luxury drinks for parties has definitely been cut back during the downturn, but a 40 per cent drop is extreme.”
Earnings from the group’s watches division plunged 73 per cent as the luxury goods industry – which is worth $240bn globally – felt the pinch.
Total sales inched up by just 0.2 per cent in the first half to €7.81bn, driven by gains at LVMH’s fashion and leather goods business, including double-digit percentage sales growth at fashion house Louis Vuitton.
The group said it hopes to steal market share from its rivals in the next quarter by launching a raft of new products.