LVMH issues third profit warning

LVMH's full year outlook is "uncertain"

French luxury goods group LVMH has issued its third profit warning for the year, after the 11 September attacks on the US pushed third-quarter sales well below market forecasts.

Like much of the luxury goods sector, the group was already hurting from the global economic slowdown.

LVMH brands

Louis Vuitton leather goods

Dior perfumes

Givenchy couture

Moet champagne

Hennessy cognac

This was compounded by the US attacks, which further undermined consumer spending and travel.

LVMH, whose 50 brands include Louis Vuitton leather goods, Dior perfumes and the Givenchy couture label, is highly geared toward tourist spending.

'Uncertain'

While the outlook "remained uncertain", the company said it would try to match last year's operating profit.

"It would be premature to give estimates for full-year results today," the company said in a statement.

"That said, we are focusing all our efforts on reaching at least the same level of operating profitability in 2001 as 2000."

LVMH shares, which lost 42% percent of their value in the 10 days after the attacks, gained 2.7%.

Third warning

In May, chairman Bernard Arnault said the company's double-digit growth forecast for sales and operating profit were only targets, "not a commitment".

Then on 13 September the group cut its forecast for operating profit growth to 5-10% from the previous double-digit growth forecast.

LVMH released the latest warning with third-quarter turnover figures which showed a lower-than-expected 3.9% rise.

The figures revealed slowing sales of champagne and leather goods and losses at the company's upscale retail branch.

Improvement in sight

But LVMH also noted that sales had begun to show improvement at the end of September.

"The dip in sales from segments directly affected by the attacks has been only partially offset by good performances by Sephora (cosmetics), cognac and the Japanese market," the group said.

It added that in the past few weeks there had been "tangible signs of improvement in areas that were most directly touched" by the strikes in New York and Washington.