HR Quarterly Round-Up: LVMH, Givaudan, Talbots

(Photo Credit: Mitchell Feinberg/LVMH)

LVMH's Revenue Jumps on Restocking (WSJ): France's LVMH Moet Hennessy Louis Vuitton (MC.FR) Tuesday fueled hopes for a swift rebound in the luxury-goods sector after it posted an 11% surge in first-quarter revenue that beat expectations.

Givaudan Sales Up 9.2 Percent (WWD): Givaudan reported its first-quarter sales increased 9.2 percent year-over-year to 1.07 billion Swiss francs, or $1.01 billion at average exchange. The Swiss firm’s fragrances and flavors divisions both contributed to growth.

Talbots' profit shows proof of turn, shares rise (Reuters): Women's clothing retailer Talbots Inc (TLB.N) posted a much better-than-expected quarterly profit and forecast higher sales as its turnaround efforts take hold, sending its shares up nearly 5 percent.

LVMH Beats Estimates on Vuitton, Says Cognac Sales Picking Up

LVMH Beats Estimates on Vuitton, Says Cognac Sales Picking Up

By Ladka Bauerova

Oct. 19 (Bloomberg) -- LVMH Moet Hennessy Louis Vuitton SA, the largest luxury-goods maker, reported third-quarter revenue that beat analysts’ estimates after “exceptional” demand for Vuitton bags in China, and said cognac demand is improving.

Sales slipped to 4.14 billion euros ($6.2 billion) from 4.16 billion euros a year earlier, the Paris-based company said today after markets closed. That surpassed the 4.07 billion-euro median estimate of five analysts surveyed by Bloomberg News.

Sales of Louis Vuitton apparel and accessories posted “double-digit” growth, LVMH said. Demand for cognac “significantly” improved as wholesalers in the U.S. began to replenish their inventories during the quarter, the company said, echoing the outlook from smaller liquor rival Remy Cointreau SA released last week.

“I can’t say the crisis is over yet, but we are beginning to see some light at the end of the tunnel,” Chief Financial Officer Jean-Jacques Guiony said during a conference call. “Louis Vuitton’s performance in China was exceptional.”

LVMH shares rose 2.45 euros, or 3.4 percent, to 74.90 euros in Paris trading today, the highest in more than a year. They have rallied 57 percent in 2009 after tumbling 42 percent last year, when Lehman Brothers Holdings Inc.’s bankruptcy spooked luxury-goods buyers.

Revenue at the company’s fashion and leather goods division gained 5.3 percent, fueled by Vuitton sales. Wholesale sales of other LVMH fashion brands including DKNY and Fendi had a “double-digit” decline in the third quarter, though they improved in September, Guiony said.

Revenue at LVMH’s wines and spirits division, which makes Veuve Clicquot champagne and Hennessy cognac, fell 8.6 percent in the quarter as drinkers in the U.S. and Russia cut back. Unlike cognac, the champagne market “remains difficult” as some consumers switch from LVMH’s expensive vintages to cheaper brands, Guiony said.

Watch and jewelry sales, which make up about 5 percent of total revenue, dropped 22 percent, while perfumes and cosmetics slid 4.6 percent. The retail unit, which includes the Sephora cosmetics chain and Duty Free Shops, climbed 2.5 percent.

(SOURCE: Bloomberg.com)

Amen, Anna!

Anna Wintour gets it.

In a recent interview with The Wall Street Journal, the editor of Vogue magazine breaks down what is wrong with the fashion industry:

WSJ: If fashion is a barometer of the prevailing mood, what can we expect to see for fall 2009?

Ms. Wintour: It is so important for designers not to run scared, and not to be too worried about what's safe and what's commercial.

Right now, what's going to work is something their customer doesn't have in her closet and that has a real intrinsic sense of value. …Because to be honest there's been too much product, too much copy-catting, and, probably too much consumerism. I think a sense of clarity, a sense leveling off and a sense of reality is needed.

BINGO! Designers have turned into expensive versions of H&M, focusing solely on short-term trends instead of long-term value. I'm not saying that trends should be ignored, as there are still some who can afford to acquire expensive "It" items. However, that isn't true for the majority who want value, so there needs to be a mix of trends and timeless classics.

People are willing to pay full price for high-end labels, provided the pieces are high quality, exclusive and are fashionably durable, meaning that 10, 20 years later the pieces aren't dated. Hermes and LVMH are indicative of that. While other companies in the fashion retail sector posted losses, LVMH reported a fourth-quarter sales increase of 4%, and Hermes reported 2008 sales rose 8.6%, exceeding analyst forecasts.

Sorry, but you can't design any ol' garment, slap a famous name on it and expect it to sell in today's economy. The sooner designers realize this, the better off they will be.

Will LVMH Acquire Coach?

Coach Inc. and LVMH
Sittin' in a tree
M-E-R-G-I-N-G?

According to a report from WWD, that's the speculation going around the retail industry:
LVMH will have their 2008 Annual Results Presentation on Feb. 5th, so stay tuned......

More than 13,800 Coach Inc. calls changed hands on Friday, fueled by rumors that French luxury goods conglomerate LVMH Moët Hennessy Louis Vuitton might acquire the luxury accessories marketer, according to OptionsMonster. Typical volume for Coach calls is 2,500 contracts. A Coach spokeswoman said, “The company doesn’t comment on market rumors.” LVMH executives declined comment as well. Although Coach has been the target of mergers talks in the past, market sources noted the firm, founded in 1941, has a long history of preferring to remain independent. Shares of Coach ended Friday’s session at $14.06 in heavier than average trading of 10.8 million shares, compared with average daily volume of 7.3 million shares.

UPDATE 2/4/09:

WWD.com reports that LVMH have denied any interest in acquiring Coach, Inc.:

LVMH Moët Hennessy Louis Vuitton has squelched speculation the French luxury giant could acquire Coach, as a spokesman officially denied any interest in the American accessories marketer.

As reported, more than 13,800 Coach Inc. calls changed hands last Friday, fueled by takeover rumors. Typical volume for Coach calls is 2,500 contracts.

The denial comes a few days before LVMH is set to report its 2008 results at a press conference in Paris on Thursday.

ELuxury.com Shuts Down To Reinvent Itself

The retail industry was blind-sided last Friday when LVMH announced that it would be closing it's high-end retail commerce website, eLuxury.com in the next six months.

Unlike other retail closings, this one has nothing to do with financial performance. In fact, eLuxury.com has had double-digit sales growth from 2007 to 2008. A spokeswoman for LVMH told WWD.com that the decision to shut down eLuxury was because "many of the brands it sells have developed their own online presences".

However, eLuxury.com will still exisit, just in a different form. WWD.com reports:

“Starting in mid 2009, eLuxury’s new mission will be to create an ‘e-window’ into the world of luxury, by serving as an information reference for luxury in fashion, art de vivre, leather goods, wines and spirits, watches and jewelry, gastronomy, cars, yachts and services,” the spokeswoman said. “To that end, eLuxury intends to develop collaborations with the most prestigious names in the world of luxury media, as well as the main contributors of the luxury world.”

Can an e-magazine that's backed by one of the world's largest luxury congolmerates truly serve as a "reference for luxury in fashion"? In its current state, as a retail site, while eLuxury.com offers non-LVMH brands in its lineup, it's the LVMH brands that get the best product placement on their site, and in their email promotions. Will that carry over into the new venture, or will the new eLuxury give its readers bipartisan coverage of the luxury industry allowing PPR and Richemont, LVMH's biggest competitors, to receive positive exposure?