LVMH Moët Hennessy Louis Vuitton recorded revenue of 10.6 billion euros (11.5 billion dollars) for the first quarter of 2020, down 15 percent compared to the same period in 2019 and down 17 percent on an organic basis. The company said, the Fashion & Leather Goods business group recorded a decline in organic revenue of 10 percent or 9 percent reported to 4,643 million euros (5,045 million dollars) due to store closures in several regions around the world, while online sales saw rapid growth.
Commenting on the impact of Covid-19, Bernard Arnault, Chairman and Chief Executive Officer of LVMH, said in a statement: “In this unprecedented context, I would first like to thank our teams around the world, who have mobilized to help caregivers and participate in the collective effort by making hydroalcoholic gel for hand sanitizers, by facilitating the movement or by producing medical masks or even by sourcing critical equipment for hospitals.”
Results of LVMH’s core segments hit by corona pandemic
In Perfumes & Cosmetics, organic revenue decreased 19 percent and 18 percent reported to 1,382 million euros (1,502 million dollars), while the Watches & Jewelry business group recorded a 26 percent drop in organic revenue to 792 million euros (860.5 million dollars) and reported revenues dropped 24 percent. The company added that Bvlgari experienced a decline in its activity due to the closure of its stores, in Asia in particular and after a good start to the year, TAG Heuer and Hublot were affected by the reduction of orders by retailers.
In Selective Retailing, organic revenue was down 26 percent and reported revenues declined 25 percent to 2,626 million euros (2,853 million dollars). The company said, while all the Sephora stores were closed in China for a major part of the quarter, those located in Europe and the United States have been closed since mid-March. Online revenue significantly increased over this period. Shopping in stores has gradually picked up in China since early April. DFS experienced a significant decline in activity in most destinations as a result of the suspension of international travel.
LVMH says store closures will impact annual turnover
LVMH further said that the closures of the group’s manufacturing sites and stores in most of the world’s countries in the first half, will have an impact on the annual revenue and results. The company hopes that the recovery happens gradually from May or June after a second quarter which will still be very affected by the crisis, in particular in Europe and the US.
At a meeting on April 15, 2020, the LVMH board of directors assessed the economic situation resulting from the Covid-19 pandemic and, in light of current events and governmental recommendations, decided to propose a 30 percent reduction in the dividend announced on January 28 for shareholders’ approval at the AGM on June 30, 2020. The company said, dividend for 2019 will therefore be 4.80 euros per share and, given the interim dividend paid on December 10, 2019, the balance of 2.60 euros per share will be paid on July 9, 2020. In addition, LVMH added that Bernard Arnault, as Chairman and Chief Executive Officer, and each of the other executive board members have decided to give up their remuneration for the months of April and May 2020 as well as all the variable remuneration relating to 2020. The board members of the company also took the decision to reduce their attendance fees by 30 percent for 2020.