LVMH Watch and Jewelry Revenue Down 1%

LVMH Moët Hennessy Louis Vuitton, said Monday that first quarter revenue for its Watches and Jewelry division fell 1 percent to 624 million euros ($815.6 million) due to cautious buying by multi-brand retailers. It was the only business division in the luxury goods conglomerate to show a decline in revenue for the period. In organic terms (with comparable structure and constant exchange rates), revenue grew 2 percent.

TAG Heuer’s first quarter was marked by the 50th anniversary of its Carrera line and the new partnership with McLaren which was announced at the Geneva Motor Show. Hublot and Zenith also had a good start to the year. In jewelry, Bulgari “recorded strong revenue growth in its own stores,” largely based on the success of its Serpenti line.

Other brands in the division are Hublot, Zenith, Chaumet, Fred and De Beers Diamond Jewellers.

LVMH said total revenue for the 2013 fiscal year increased 6 percent to 6.94 billion euros ($9.07 billion). Organic revenue growth was 7 percent compared to the same period in 2012, which saw a sharp rise.

The Paris-based conglomerate—whose brands also include Moët Chandon, Louis Vuitton, Dior and Sephora—said it saw “strong growth” in Asia and the United States, while Europe “demonstrates good resistance despite a challenging economic environment.”

First quarter results in its other business division are as follows:

The Wines & Spirits division recorded a revenue rise of 6 percent. Champagne sales were “notably robust” in Asia, which compensated for softer demand in Europe. Hennessy cognac had a “solid performance” in the United States and “rapid growth” in China.

The Fashion & Leather Goods division was nearly flat year-over (0.4%) Louis Vuitton “continued its progress,” the company said. Fendi “benefited from continued developments in fur and leather and pursues” and Céline “made excellent progress” in its own stores.

Perfumes & Cosmetics division experienced a 5 percent increase for the period. Christian Dior recorded “solid growth” due to the “vitality of its perfumes and, in particular, the continued strength of J’adore, Miss Dior and Dior Homme. The new lipstick Dior Addict and the premium skincare Prestige also contributed to the brand’s growth. Guerlain continued to benefit from the strong momentum of La Petite Robe Noire and the success of its high-end skincare Orchidée Impériale,” the company said.

In the Selective Retailing division showed a 16 percent increase for the period. DFS had an “excellent performance driven by the continued growth in Asian tourism.” Sephora gained market share in all its regions as it continues to expand its global store network. Online sales also experienced “rapid growth.”

“In an economic environment which remains uncertain in Europe, LVMH will continue to focus its efforts on developing its brands, will maintain a strict control over costs and will target its investments on the quality, the excellence and the innovation of its products and their distribution,” the company said. 


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Tiffany's Soft Q4 Doesn't Tarnish Sparkling Year

Tiffany & Co. said Tuesday that worldwide net sales for the fourth quarter increased 8 percent, year-over-year, to $1.2 billion. On a constant-exchange-rate basis, worldwide net sales rose 7 percent and comparable store sales rose 5 percent.

Net earnings declined 2 percent for the period, ended January 31, to $178 million, due to higher costs.

Meanwhile, worldwide net sales for fiscal 2011 rose 18 percent to $3.6 billion. On a constant-exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales and comparable store sales rose 15 percent and 13 percent, respectively.

Net earnings increased 19 percent to $439 million. Net earnings increased 24 percent excluding nonrecurring items, including the recent move of Tiffany’s headquarters staff in New York. Net earnings as a percentage of net sales rose to 12.1 percent, from 11.9 percent in the prior year.

“Tiffany exceeded the goals that we had set at the start of 2011 for both sales and earnings growth, although we concluded the year with softer-than-expected results,” said Michael J. Kowalski, Tiffany chairman and chief executive officer.

In its outlook for 2012, Tiffany said it expects worldwide net sales to increase by approximately 10 percent, primarily driven by sales growth in Asia-Pacific and the Americas. The New York-based company plans to open 24 stores in 2012—nine in the Americas, seven in Asia-Pacific, three in Europe—while beginning the operation of five stores in the United Arab Emirates.

The luxury retail jeweler reported annual double-digit growth in all regions. Unsurprisingly, the Asia-Pacific region reported the strongest growth.

Sales by region are as follows:

* In the Americas, sales increased 15 percent to $1.8 billion in fiscal 2011 and rose 5 percent to $605 million in the fourth quarter. On a constant-exchange-rate basis, total Americas sales rose 14 percent in fiscal 2011 and 5 percent in the fourth quarter, largely due to comparable store sales increasing 13 percent in the year and 3 percent in the fourth quarter. On that basis, comparable branch store sales in the Americas increased 11 percent in the year and 3 percent in the fourth quarter, while sales in the New York flagship store increased 20 percent for the year and 2 percent in the fourth quarter. Combined Internet and catalog sales in the Americas rose 6 percent in fiscal 2011 and declined 4 percent in the fourth quarter.

* In Asia-Pacific, sales rose 36 percent to $748 million in the full year and increased 19 percent to $225 million in the fourth quarter. On a constant-exchange-rate basis, total sales and comparable store sales rose 31 percent and 27 percent, respectively, in the year, and rose 18 percent and 13 percent in the fourth quarter, due to increased sales in most countries.

* In Japan, sales increased 13 percent to $617 million in fiscal 2011 and rose 12 percent to $204 million in the fourth quarter. On a constant-exchange-rate basis, total sales in Japan rose 3 percent in the year and 5 percent in the fourth quarter and comparable store sales increased 4 percent in both periods.

* In Europe, sales increased 17 percent to $421 million in the fiscal year and 3 percent to $142 million in the fourth quarter. On a constant-exchange-rate basis, total sales in Europe rose 12 percent in the year and 3 percent in the fourth quarter while comparable store sales increased 6 percent in the year and declined 2 percent in the fourth quarter. Throughout the fourth quarter and year, sales growth in Continental Europe was relatively stronger than results in the U.K., the company said.

Tiffany currently operates about 247 stores (102 in the Americas, 58 in Asia-Pacific, 55 in Japan and 32 in Europe.

Other sales declined 5 percent to $51 million in the fiscal year and fell 22 percent to $12 million in the fourth quarter due to declines in wholesale sales of rough diamonds in both periods as well as lower wholesale sales of finished products to independent distributors in the fourth quarter.

Other financial highlights:

* Gross margin (gross profit as a percentage of net sales) of 59.0% in the fiscal year compared with 59.1% a year ago, reflecting both higher product costs and shifts in product sales mix toward higher-priced jewelry that achieves a lower gross margin being largely offset by sales leverage on fixed costs. Gross margin in the fourth quarter was 60.4 percent, versus 60.9 percent in the prior year for generally similar reasons except for a lack of sales leverage on fixed costs.

* SG&A (selling, general and administrative) expenses increased 18 percent in the fiscal year and 10 percent in the fourth quarter, with both increases affected by nonrecurring costs related to the relocation of Tiffany's New York headquarters staff. Excluding the nonrecurring costs in all periods, SG&A expenses rose 16 percent in the fiscal year and 11 percent in the fourth quarter primarily due to increased store occupancy, labor and marketing costs.

* The company repurchased approximately 2.6 million shares of its Common Stock in the fiscal year at a total cost of $174 million, or an average cost of $66.23 per share. In the fourth quarter, the Company spent $35 million to repurchase approximately 525,000 shares at an average cost of $67.26 per share. At January 31, 2012 approximately $218 million was available for future repurchases under the currently authorized plan which expires in January 2013.

2012 Sales Off To A Good Start

Photo credit: Olivia Bucks/The Oregonian

Gift cards, redemptions and warm weather led to solid and widespread growth for January retail sales, according to two reports.

January retail industry sales (excluding automobiles, gas stations and restaurants) increased 0.9 percent seasonally adjusted from December and 4 percent unadjusted year-over-year, according to the National Retail Federation.

“Thanks to a combination of unseasonably warm weather across much of the country and millions of shoppers with gift cards burning holes in their pockets, retailers are still riding the tailwinds of consumers’ spending power,” said Matthew Shay, NRF President and CEO. “As a traditionally slower sales month for the industry, it’s encouraging to see such sustained growth in consumer spending and sentiment.”

Meanwhile, January retail sales data, released by the U.S. Department of Commerce, showed total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 5.6 percent unadjusted year-over-year and 0.4 percent seasonally adjusted month-to-month.

Among the highlights of NRF data are:

• Sales in sporting goods, hobby, book and music stores increased 1.1 percent seasonally month-to-month and 3.5 percent unadjusted year-over-year.

• General merchandise stores’ sales increased 2 percent seasonally-adjusted over December and 4.7 percent unadjusted year-over-year. 

• Sales at building material, garden equipment and supplies dealers increased 0.2 percent seasonally adjusted from the previous month and a strong 10.5 percent unadjusted year-over-year.

• Sales at furniture and home furnishing stores decreased 0.2 seasonally adjusted from December and increased 7.9 percent unadjusted year-over-year.

• Electronics and appliance stores’ sales increased 0.5 percent seasonally adjusted month-to-month and decreased 1.1 percent unadjusted year-over-year, and sales at clothing and clothing accessory stores’ sales were flat over the previous month and increased 3.4 percent unadjusted over last year.

Retail Sales Expected to Increase by 3.4% in 2012, NRF Says

Photo Credit: The Oregonian

Retail industry sales are expected to rise 3.4 percent to $2.53 trillion in 2012, according to the National Retail Federation—slightly lower than the pace of 2011, in which sales grew 4.7 percent. NRF excludes the sales of autos, gas and restaurants in its definition of retail sales.

Many economists estimate that real U.S. GDP will rise approximately 2.1 to 2.4 percent as the economy is still being plagued by stubbornly high unemployment and uncertainty over job growth, NRF says.

“Our 2012 forecast is a vote of confidence in the retail industry and our ability to succeed even in a challenging economy, said Matthew Shay, NRF president and CEO “Over the last 18 months, retailers have been on the forefront of the economic recovery – creating jobs, encouraging consumer spending, and investing in America.”

Many factors will continue to influence the expected slowdown in consumer spending, but none remain more cumbersome than the stalled unemployment rate and lack of newly-created jobs, NRF said. A number of factors contributed to NRF’s 2012 economic forecast, including:

* Employment: The number of Americans out of work is at its lowest level in nearly three years, and the rise in employment and hours worked should bolster income and spending.

* Income growth: Consumers are constrained by modest growth in income. Congress extended the cuts in payroll taxes and unemployment benefits for only two months. While these provide a lift, and are likely, consumers may act cautiously until both are approved. Income is predicted to lag consumption on a year-over-year basis.

* Housing: While most of the economic reports dealing with housing have shown a little more strength, these reports should be treated with caution, as some of the improvement is due in part to unseasonably mild weather. NRF expects home sales and construction will improve slightly in 2012 with low interest rates and affordability at an almost 30 year high.

* Inflation: Increase costs have been a drain on consumer purchasing power due to extraordinary agricultural commodity price inflation as well as high oil prices due to global geopolitical tensions. NRF expects inflation to slow down near a two percent range. Rising gas prices may also put pressure on spending.

* Consumer Credit: Easier lending standards are expanding consumer credit. Revolving credit appeared to break out from its holding pattern showing a big surge in November, which indicates consumers have confidence to take on debt.

* Consumer confidence: Confidence continues to rebound from August lows but remains fragile given volatile financial market conditions and anemic housing markets.