LVMH shares slumped by 6% on Thursday as first half results from the luxury goods group disappointed investors.
The watches and jewellery business group, which houses Tag Heuer, Hublot and Zenith, saw sales fall by 1% year-on-year, although without the impact of negative exchange rate movement sales grew 3%, the company said.
Profits from the division fell by 31% from €155m – €107m. A company statement noted that: “The uncertainties linked to the economic environment continue to make multibrand retailers prudent in their purchasing. The decrease in profit from recurring operations, which stood at €107 million, is principally explained by a negative exchange rate effect, while investments in communications continue.”
Total revenue for the group was €14 billion in the first half of 2014, an increase of 3%. Organic revenue growth was 5% compared to the same period in 2013. The Group continued to grow in the United States and Asia. Europe demonstrated resilience despite a still challenging economic environment.
The group defines organic growth as a measure that strips out the integration of Loro Piana into the groop and constant exchange rates.
Profit from recurring operations for the first half of 2014 fell 5% to €2.576 million.
Bernard Arnault, chairman and CEO of LVMH, commented: “The results of the first half demonstrate LVMH’s excellent resilience, thanks to the strength of its brands and the responsiveness of its organisation in a climate of economic and financial uncertainties.