Bernard Arnault, CEO and chairman of LVMH, will sleep well tonight. The world's largest luxury group posted double-digit organic revenue growth across all divisions on Tuesday. First-half profit for LVMH exceeded that of analysts' estimates, up 25 percent from 2010.
The momentum is the result of exceptional levels of profitability at LVMH darling brand Louis Vuitton, continual demand for high-quality wine and spirits, and aggressive development of LVMH's fashion brands.
This reiterates the return of luxury, based on consumer demand, especially with similar results recently posted by other luxury goods companies like Burberry, Hermès and Mulberry. Although demand for luxury brands is strong in the U.S. and Europe, much of the growth in this sector is driven by demand in emerging markets, especially in Asia, which saw a 26% growth in H1 revenue changes versus that of 2010.
Revenue breakdown by region for LVMH was reported as follows: Asia 28%, US 22%, Europe 19%, France 13%, Other 10%, Japan 8%.
The French luxury group giant has consistently made headlines this summer. In June, LVMH acquired family-owned and operated company Bulgari, adding a sparkling gem to its already-impressive collection of watch and jewelry brands, that include Zenith, TAG Heuer and De Beers.
In July, LVMH named new creative directors at Kenzo, folding an eight-year collaboration with Antonio Marras. The announcement that Opening Ceremony founders Carol Lim and Humberto Leon would replace Marras confirmed the company's desire to embrace a more youthful image.
In 2010, LVMH built up a stake in Hermès slightly exceeding 20 percent. Hermès raised its projected 2011 revenue forecast after Q2 sales rose 18 percent in July. First-half results will be posted on August 31. Meanwhile, LVMH is expected to be questioned heavily for intentions regarding the legendary leather goods company. Furthermore, the company refuses to release its projected 2011 revenue forecast, only to respond with the notion that it will be "positive."
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