UPDATE 2-LVMH says ‘bling’ is out but biz trends on the mend

* LVMH Q4 sales up 1 pct like-for-like

* LVMH says saw improvement in recent months

* LVMH 2009 sales 17.05 bln euro, net profit 1.76 bln

* Proposes dividend increase of 3 pct
(Adds earnings details, management quotes, background)

By Astrid Wendlandt

PARIS, Feb 4 (BestGrowthStock) – LVMH (LVMH.PA: ) boss Bernard
Arnault said ‘bling, bling’ was out, but business was improving
for the French luxury group, particularly in spirits, champagne
and watches.

The Paris-based luxury giant, which makes Louis Vuitton
bags and Hennessy cognac, said on Thursday it had produced
record revenue in December and several of its divisions’
lieutenants gave a relatively upbeat trading update.

LVMH defied the luxury industry’s worst slump in two
decades with a 1 percent rise in like-for-like sales in the
fourth quarter and a smaller-than-expected drop in operating
profit for 2009.

Arnault said the crisis had led consumers to look for
authentic and genuine luxury more than ever, a trend which
analysts say tends to benefit strong and well established
brands.

“With the crisis, ‘bling, bling’ is largely passe … and
something which someone should not show off,” Arnault said.

Christophe Navarre, head of LVMH’s wines and spirits unit,
said champagne and particularly prestige vintages, had suffered
greatly last year but trends improved in January.

“Stocks are at their optimal level,” Navarre said about the
group’s wines and spirits. “January was good, February will be
good, so we will have a good first quarter.”

Philippe Pascal, head of LVMH’s watches and jewellery
division, said orders for the new collections of Hublot and Tag
Heuer watches, two of its biggest brands, were higher than
expected in January.

“We had an encouraging January,” Pascal said.

MORE GOOD NEWS

Earlier this month, several luxury products retailers
including Burberry (BRBY.L: ), Richemont (CFR.VX: ) and Swatch
(UHR.VX: ) published forecast-beating sales for 2009 and produced
optimistic trading updates.

The positive news flow led several analysts to upgrade
their 2009 and 2010 forecasts for luxury companies, including
Hermes (HRMS.PA: ), which will report sales on Friday, and Gucci
Group, owned by PPR (PRTP.PA: ), whose numbers are due on Feb.
18.

However, LVMH finance director Jean-Jacques Guiony said the
group had not yet noticed an improvement in wholesale orders
for fashion and leather goods while Pascal said wholesale
orders had “practically stopped” for Chaumet jewellery and
watches.

Yves Carcelle, chief executive of Louis Vuitton, which
contributes roughly half of LVMH’s operating profit, said the
brand would enter the Dominican Republic, Lebanon and Poland
this year and spend money on refurbishing existing shops.

LVMH’s profit from recurring operations reached 3.35
billion euros ($4.65 billion) in 2009, down 8 percent from 3.63
billion in 2008, beating an average forecast of 3.24 billion in
a Reuters poll of 10 analysts.

On a reported basis, the group’s revenue fell 2.4 percent
to 5.11 billion euros in the fourth quarter against the same
period last year.

Over the year, revenue fell 4 percent on a like-for-like
basis.

Asked about acquisitions, Arnault said the group’s priority
was organic growth. “For M&A, we will see,” Arnault said.
“Prices are still very high.”

As usual, the group did not give an outlook for the current
year.

Total net profit for 2009 reached 1.76 billion euros,
roughly in line with the Reuters poll forecast of 1.75
billion.

LVMH proposed raising the dividend by 3 percent to 1.65
euros a share for 2009.

LVMH shares have gained nearly 4 percent since the
beginning of the year after climbing 64 percent in 2009.

Stock Market Money

($1=.7207 Euro)

For related story on Sephora see [ID:nLDE6132KH]

(Editing by James Regan and Richard Chang)

UPDATE 2-LVMH says ‘bling’ is out but biz trends on the mend