LVMH Revenue Dives as Tourism Dries Up

RAPAPORT...  LVMH, which owns Bulgari and Chaumet, saw sales of watches and jewelry slump in the first half of 2020 as the coronavirus reduced tourist spending and affected demand from wholesale customers.The category endured the worst performance of the luxury group's major product types, with revenues falling 38% year on year to EUR 1.32 billion ($1.55 billion), LVMH reported Monday. The division incurred an operating loss of EUR 17 million (around $20 million), compared with a profit of EUR 357 million ($419 million) a year earlier.Watches and jewelry, and especially Bulgari, are highly exposed to the travel-retail business, LVMH chief financial officer Jean Jacques Guiony explained in an earnings call, transcribed by Seeking Alpha. The pandemic has ravaged tourist spending, especially in Europe and in Asian hubs such as Hong Kong, he noted."So, this business suffers particularly from the current situation," Guiony said.Destocking by third-party retailers that carry LVMH brands further impacted sales, the company added. A rebound in China in the second quarter helped limit the losses.Group revenue fell 27% to EUR 18.39 billion ($21.57 billion) for the first half, with sales down heavily in the US and Europe in the second quarter. Net profit plummeted 84% to EUR 522 million ($612 million) as the sales slump outpaced the company's reduction in costs.Image: A Bulgari store in the Ginza shopping district of Tokyo, Japan. (Shutterstock)