LVMH Moët Hennessy Louis Vuitton released its 2016 profit report on Thursday. The world's leading luxury products group recorded revenue of €37.6 billion in 2016, an increase of 5% over the previous year, with organic revenue growth of 6%. According to the report, the American market – remains on a good track for the luxury conglomerate – which owns Louis Vuitton, Givenchy, Loewe, Celine, Marc Jacobs, and Berluti, among other brands – as does Europe. Asia, excluding Japan, continued with strong momentum.
Bernard Arnault, Chairman and CEO of LVMH, said: "LVMH achieved an excellent performance in 2016 within a context of geopolitical and economic instability. Continued innovation, entrepreneurial spirit and the quest for excellence: all Maisons continue to assert these core values while maintaining rigorous execution of their strategies on the ground. In an environment which remains uncertain, we can count on the appeal of our brands and the agility of our teams to strengthen, once again in 2017, our leadership in the universe of high quality products."
Profit from recurring operations reached €7 billion in 2016, an increase of 6%, to which all business groups, apart from selective distribution, contributed. This result compares to 2015 which was itself a year of growth. Operating margin reached 18.7%. Group share of net profit was €3 981 million, representing growth of 11%.
According to a release from the group, its Fashion & Leather Goods division recorded organic revenue growth of 4% in 2016. On a reported basis, revenue growth was 3%. Profit from recurring operations increased by 10%.
The Louis Vuitton brand - where profitability remains at "an exceptional level" - had a good year driven by what LVMH claims is "the level of creativity across all its businesses." The continued success of its iconic product range and the strong demand for recent creations such as the new luggage designed by Marc Newson and the Louis Vuitton fragrances, all contributed to this growth.
Fendi recorded robust growth crossing the symbolic revenue threshold of 1 billion euros during the year. Loro Piana continued to expand its distribution network and opened a flagship store in Paris. Céline, Loewe and Kenzo all continued to grow. Marc Jacobs continued to work on changes to its collection. On conference call on Thursday, Arnault shed light on the struggling New York-based brand, saying: "I’m more concerned about Marc Jacobs than the U.S. president," according to Quartz columnist Marc Bain.
As for Marc Jacobs, LVMH is said to be searching for a new CEO to replace Sebastian Suhl. Market sources say Kenzo's Eric Marechalle is likely to succeed Suhl as the company’s chief executive officer. If it happens, Marechalle’s shift to Marc Jacobs would be in keeping with LVMH’s penchant for finding talent - namely, executive-level individuals - internally. Suhl previously held the CEO position at Givenchy, as well - before joining Jacobs.
Donna Karan was sold in December to the American G-III group., and luggage maker, Rimowa joined the LVMH group.
As for 2017 and "a climate of geopolitical and currency uncertainties," LVMH asserts that it is "well-equipped to continue its growth momentum across all business groups." The Group claims it will maintain a strategy focused on developing its brands by continuing to build on strong innovation and a constant quest for quality in their products and their distribution.
"Driven by the agility of its teams, their entrepreneurial spirit, the balance of its different businesses and geographic diversity, LVMH enters 2017 with caution but has, once again, set an objective of increasing its global leadership position in luxury goods."