The world might be going through something of a recession, but it seems there is still plenty of cash around for spending on the little (or not so little) luxuries in life.
This is clearly shown in the latest results from the French luxury goods group LVMH, which reported strong sales growth in the final quarter of 2002 and ended the year with operating profit growth of 25 per cent.
Consolidated sales for the year reached €12.7 billion, up 4 per cent on the previous year and rising by 8 per cent on a constant exchange rate basis. But the fourth quarter showed much greater sales growth, with turnover ahead 8 per cent or an impressive 16 per cent on a constant exchange rate basis.
LVMH highlighted the fourth quarter performance not only because the improvement came on the back of strong Q4 growth in 2001 but also because it the growth was generated against the background of general economic uncertainty at the end of the year.
Sales from LVMH's wine and spirit brands improved by 2 per cent for the year to €2.3 billion, despite a 1 per cent decline in sales during the fourth quarter related almost entirely to poor exchange rates.
The major champagne brands Moët & Chandon, Veuve Clicquot, Dom Perignon and Krug all recorded strong volume growth in 2002, notably in the US, the UK and Japan, while the Cognac brand Hennessy continued to gain market share, with growth coming notably in Asia (excluding Japan), and the US. IN Europe, Hennessy's growth was driven by the launch of a new sub-brand, Fine de Cognac.
On a constant exchange rate basis, and excluding Pommery, which was sold in May 2002 to Vranken Monopole, sales grew 11 per cent in 2002 for the wines and spirits business group.
Among LVMH's other business units, the fashion and leather goods unit showed the best growth, 16 per cent for the year, but the DFS duty free business in Asia dragged down sales from the distribution arm (despite a good performance from perfume retailer Sephora), which dropped 5 per cent for the year.
"Against an economic, political and financial environment which remains difficult, LVMH will continue to pursue its long-term strategy based on the creativity and quality of its products,"the company said in a statement.
"The group will continue to concentrate on the development of its "star" brands and improving results.