Posted on: Friday, March 7, 2003

DFS parent turns second-half profit

Bloomberg News Service

LVMH Moet Hennessy Louis Vuitton SA, the world's largest producer of luxury goods and owner of DFS-Hawai'i stores, returned to profit in the second half, helped by a new 10-floor Vuitton store in Tokyo and the closure of unprofitable duty-free shops.

Net income was $375 million, compared with a loss of $252 million in the same period last year, Bloomberg calculations show.

Sales gained in January and February, Chairman Bernard Arnault said at a Paris press conference.

Arnault expects earnings to rise this year as the Tokyo store, Vuitton's biggest, attracts buyers for goods such as $1,000 handbags. Japanese sales of LVMH's most profitable brand grew at four times the pace of all the French company's revenue last year. LVMH cut costs by shutting duty-free and perfume shops and selling the Hard Candy cosmetics and Pommery champagne units.

"They're on the right track," said Scilla Huang Sun, who manages $55 million in shares at Clariden Bank "LVMH has realized it was mistaken in the past by acquiring many businesses that weren't part of its main activity."

Shares of LVMH rose 13 cents, or 0.3 percent, to $42.01 in Paris. The company said it plans to increase its dividend 7 percent to 88 cents a share.

DFS-Hawai'i, the airport duty-free retail contractor, owes the state of Hawai'i more than $40 million in back rent. Gov. Linda Lingle indicated this week that the state appears headed toward litigation with the company.