LVMH issues third profit warning since US attacks

Click to follow
The Independent Online

LVMH, the world's biggest luxury goods group, shocked the market yesterday with its third full-year profits warning since the 11 September terror attacks.

The company, which owns fashion brands such as Louis Vuitton, Givenchy and Christian Dior, cut its operating profit forecast by 10 to 15 per cent after sales fell 5 per cent to 1.1bn euros (£680m) in October.

"The consequences of the events of 11 September continue to have a serious impact on the global luxury goods market," LVHM said. "The sharp reduction in travel became even clearer in October and had a considerable effect on sales to tourists in most countries."

Analysts said yesterday's crash of an American Airlines passenger plane would exacerbate the gloom in the luxury goods sector.

"The plane was going to the Dominican Republic, not to a business city, so we can assume it was full of holidaymakers," said Rasha Khouri at UBS Warburg. She added that people would be even less likely to travel as a result, which would hit the group's DFS duty-free shops and Sephora perfume business.

Shares in LVMH initially fell 9 per cent before recovering to close down 3.1 per cent at 40.78 euros. The stock had regained nearly half of the share price fall to a low of 28.40 euros in the week after the terror attacks.

Since 11 September LVMH has downgraded its operating growth target three times from double-digit growth to double-digit decline. Gucci, the Italian fashion house, and Richemont, the Swiss luxury goods group, have also cut profit forecasts.

However, an LVMH spokesman said sales were picking up following a fall of 8 per cent in September. The company said it saw some signs of improvement in some European countries, in Asia and in Japan.