LVMH cuts forecast to no growth in profits in 2001

Advertiser Staff and News Services

LVMH, the largest luxury goods maker, said yesterday it expects no growth in profit this year as dwindling sales prompt the French company to cut its forecast for the second time since last month's terrorist attacks on the United States.

LVMH Moet Hennessy Louis Vuitton SA said it now aims to match last year's operating profit instead of improving it by 5 percent to 10 percent, as forecast Sept. 13.

Sales fell 8 percent in September, the company said.

Worst hurt by the attacks was the company's DFS duty-free shops' travel retail division, where sales fell 29 percent in September, LVMH said. The worst declines came in Hawai'i, Guam, Saipan and North America.

Company officials have said DFS Hawai'i sales were down 80 percent after the Sept. 11 attacks, and October sales to Japanese so far are off 45 percent.

Company officials have said sales at DFS shops in Hawai'i airports fell 55 percent the last week of September.

Sales were down 48 percent at about 30 other retail shops the company operates at Honolulu airport.

The company has had to lay off and cut hours for employees in the Islands.

It said measures taken to lower the break-even point have been accelerated, and new initiatives implemented to improve profitability at DFS — particularly renegotiation of airport concessions, including those it pays in Hawai'i — and new cost reductions.

LVMH joins Prada Holding NV, Gucci Group NV and Tiffany & Co. among luxury goods companies to trim targets since the Sept. 11 attacks.

Still, LVMH, which also owns Sephora perfume outlets, may be hit especially hard because many of its stores cater to tourists, analysts said.

LVMH's profit before one-time gains fell 24 percent in the first half.