LVMH Moët Hennessy - Louis Vuitton

Hello, everyone, and thank you for joining us for LVMH's first quarter 2024 revenue announcement. I'm Rodolphe Fosin, Director of Financial Communications at LVMH, and with me is Jean-Jacques Guigny, our Chief Financial Officer. I will start by taking you through the highlights of the company's performance for the first quarter. And after these remarks, Jean-Jacques and I will be happy to take your questions. As a reminder, certain information to be discussed on today's call is forward-looking and is subject to important risks and uncertainties that could cause actual results to differ materially. For these, I refer you to the safe harbour statement included in our press release and on slide 2 of our presentation. Turning now to our announcement, our release was just issued a while ago in both French and English and is available on the LVMH website, lvmh.com, as are the slides for today's call. We begin on slide three. For the first three months of the year, the group delivered 3% organic revenue growth on a particularly challenging comparison basis. Growth was supported by all regions except Asia ex-Japan, which we'll explain in further detail later. As far as divisions are concerned, you should be familiar with most of the themes highlighted on this slide. Many were already visible at the end of last year, notably a resilient performance from fashion and leather goods, and to a lesser extent, watches and jewelry, destocking in wines and spirits, and a strong performance from Sephora and our perfumes and cosmetics brands. Turning to slide 4, you will see that the first quarter revenue reached 20.7 billion euros, up 3% on an organic basis and down 2% on a reported basis after adjusting for a negative 4% currency impact and a negative 1% perimeter impact, predominantly resulting from the disposal of Starboard. turning to slide five which shows our geographical revenue mix most regions are unchanged except japan up two percentage points in the mix to nine percent and non-japan asia down three percentage points to 33 percent The reason for this is explained on slide 6, where you can see the incidence of Chinese purchases abroad with a positive impact on Japan, which remains one of the fastest growing tourist destinations for Chinese tourists, and a negative impact on non-Japan Asia, since Chinese demand growth is currently driven by tourism outside of the region. Europe and the US were broadly consistent with group average, up 2 percentage points each. Now we'll turn to the business groups and we'll start as usual with wines and spirits on slide 9. The wine and spirits business group delivered 1.4 billion euros in revenue for the first three months of 2024. This represents a 12% increase on an organic basis versus the same period last year and a 16% decrease on a reported basis after taking into account a negative 5% currency impact and a positive 1% perimeter impact related to the acquisition of Provence Rosé wine Minuti. broken down champagne and wines generated 680 million euros in the first quarter representing an eight percent decrease on an organic basis and a 15 percent decrease on a reported basis after taking into account a positive one percent parameter impact and a negative eight percent currency impact Note that the above-average currency impact here reflects the devaluation of Argentina's pesos to which we have a small exposure through our wine business. Cognac & Spirits delivered 736 million euros in Q1, representing a 16% decrease on an organic basis and an 18% decrease on a reported basis after taking into account a 2% negative currency impact. On slide 10, the performance of Champagne & Wines was led by lower shipments in its largest market, Europe, due to large stock replenishments in the first quarter of the year, while Japan was penalized by the unfavorable phasing of price increases and equally challenging comps. Meanwhile, we saw the continued international development of Chateau d'Esclan. In cognac and spirits, Hennessy was impacted by the cautious restocking of retailers in the U.S. and by soft local demand during the Chinese New Year, although in both cases, the sellout is better than the sell-in and U.S. depletions continue to recover. Turning to fashion and leather goods on slide 12, revenue reached 10.5 billion euros for the first three months, up 2% on organic basis. After taking into account a negative 4% currency impact, revenue decreased by 2% on a reported basis. Moving on to slide 13, which details performance by brand. Louis Vuitton once again had a good start to the year. Nicolas Ghesquière celebrated a decade of consistent innovation as artistic director of women's collections, with a four-winter show held in the Cour Carrée at the Louvre. while Fire & Williams took Louis Vuitton on a journey to the American West for Men's Fall Winter Show and debuted vivid new colors for the emblematic Speedy Bag. The brand also hosted the first edition of the Louis Vuitton Watch Prize and opened a new store and an immersive visionary journeys exhibition in Bangkok. Christian Dior's creative momentum was illustrated by the good progress of Maria Grazia Chiuri and Kim Jones' ready-to-wear collections, with close to 390 million views for the light screen show of its 2024 Women's Winter Collection. Dior also unveiled a new flagship store in Geneva, The store was designed by Christian de Potempa, who had also designed your Seoul flagship in 2019. It's absolutely stunning and well worth a visit to the rue du Rhône where it is located. To give some highlights of happenings at other brands in the first quarter. Céline unveiled Hedi Slimane's distinctive Bibliothèque Nationale collection, and Céline Beauté announced the launch of its first lipstick, Rouge Triomphe, in the second half of this year. Loewe continued to benefit from the success of JW Anderson's fashion shows and unveiled his first major exhibition, Loewe Crafted World, which is currently open in Shanghai. Fendi further enriched its heritage celerial line, which is now almost 100 years young. And Loro Piana continued to expand in leather goods with the extra pocket and bale bags. Finally, Marc Jacobs celebrated its 40th anniversary. Rimova unveiled a new leather wrapping technique for its distinct suitcase line, while Berluti took inspiration from its historical store on the Rue Marbeuf for its Bivolute line. Moving to perfumes and cosmetics, on slide 15, revenue reached 2.2 billion euros for the first three months of 2024. This represents a 7% increase on an organic basis and a 3% increase on a reported basis after taking into account a negative 4% currency impact. Looking at the brand specifically on slide 16, Parfum Christian Dior enjoyed broad-based growth across geographies and all of its product categories, makeup in particular, driven by the relaunch of Rouge Dior, but also fragrances and skincare, where Sauvage, Capture, and the successful reinterpretation of Miss Dior by Francis Kurk-Jean significantly contributed to growth. Among other brands in this group, we again saw good momentum across geographies and product segments. Guerlain saw the successful extension of its star product lines, Abbey Royale in skincare and Aqua Alegria in fragrances. Parfum Givenchy enjoyed particularly strong progress of its irresistible fragrance and Prisme Libre makeup line, while several maisons expanded their regional footprint including Fenty Beauty, which recently entered China through a partnership with Sephora. Turning to watches and jewellery, on slide 18, revenue reached 2.5 billion euros for the first three months of 2024. this reflects a two percent decrease on an organic basis and a five percent decrease on a reported basis after taking into account a negative four percent currency impact and a positive one percent perimeter impact related to the first integration of jeweler of jewelry producer pedemonte For the key highlights of the division, on slide 19, Tiffany progressed towards its objective to increase the weight of its most distinctive product lines in the mix with the outperformance of the hardware and knot collections, as well as a 360-degree campaign showcasing the Maison's icons, which is displayed on this page, And Tiffany also continued to roll out its store concept, inspired by the landmark New York, where it launched its first exhibition, Culture of Creativity. Bvlgari enjoyed continued momentum in high jewelry and benefited from the rejuvenation of its B0 line, as well as category extensions across several major collections, such as Bvlgari Bvlgari, Serpenti, and Octo Watches. We're also excited to have announced the appointment of Bourguery's first ever creative director for leather goods, Marie Quatrantou, and also the creation of the Bourguery Foundation, dedicated to preserving cultural and craft heritage. Chaumet unveiled the design of the 2024 Olympic and Paralympic game medals, adorned with fragments of the Eiffel Tower. and saw particularly strong growth in high jewelry, while watchmakers Borgry, Taguerre, Hublot and Zenith presented a wide range of innovation at the AVMH Watch Week in Miami. Now turning to our final business group selective retailing on slide 21, revenue reached 4.2 billion euros. This reflects an 11% increase on an organic basis and a 5% increase on a reported basis after taking into account a negative 2% currency impact and a negative 3% perimeter impact related to the disposal of Starboard. On slide 22, Sephora had an excellent start to the year, with market share gains driven by strong growth across North America, Europe, and the Middle East, along with continued store expansion, especially in North America. Sephora also implemented the global unification of its brand signature, We Belong to Something Beautiful, And at DFS, the recovery of revenue remains gradual, as tourism recovery remains uneven. The retailer continued to move forward on its strategy and held a signing ceremony with Xenia Group, marking the official commencement of the DFS Yalong Bay project in Hainan to be opened in 2026. Finally, Le Bon Marché continues its strong momentum, driven by exceptional curation of products and animation. A few final remarks on this quarter to conclude this presentation. Firstly, to put some context on the revenue growth, the organic increase achieved in Q1 puts the average growth rate of the past five years at 10% for the group, and 16% for fashion leather goods, implying significant market share gains. Secondly, LVMH continues to benefit from the diversity of its brands and its carefully crafted regional balance. They've served us well in recent years and still do in the complex and economic geopolitical environment which continues to prevail. Finally, we will continue to invest selectively in our store network, the breadth and quality of which also proved a differentiating factor in recent years, whilst we will also endeavor to protect profitability. This concludes the presentation. Jean-Jacques and I are now available to answer your questions. As usual, if you wish to ask a question, please use the raise hand function of your application. Thank you. And the first question comes from Chiara Battistini from JP Morgan. Chiara, please ask your question.

Hello, hi, thank you very much for taking my questions. First question on the fashion and leather goods and nationalities trends. I was curious to get some more color on how Chinese, Europeans and Americans behave within that number. And notably for Europe, I see the group number for Europe. I was wondering if we could get the color between the tourist versus locals for fashion and leather goods specifically. And the second question is on Japan. That was very strong. Could you give us more color on how much pricing contributed to that number, please? Thank you very much.

Thank you, Chiara. On the nationalities for fashion leather, I would say that Not much happened. If you look at Americans, Europeans, Japanese, I mean basically the trends that we've seen since Q3 last year, so slightly negative overall, are exactly the same in Q1 of this year. The big change is Chinese, the Chinese client base, the mainlanders client base, for two main reasons. The first one is that Q4, where the numbers were pretty high, was boosted by a very easy comparison base in Q4 2022, with the lockdowns taking place in, well, more than the lockdowns. I mean, the pandemic situation taking place in mainland China in q4 2022 so this was a high boost to the growth in the chinese client base in uh in q4 and secondly we are anniversarizing a pretty strong a pretty strong business uh last year in q1 following at the end of the zero covet policy and we are quite pleased to report that overall the mainland Chinese client base in Q1 was up about 10%, slightly below 10% for fashion and leather. So there are differences between brands, but overall the growth was about 10%. Your question about Japan, there was obviously some price impact, as we said last year, that we repeatedly increased prices in Japan to offset the weakness in the Japanese yen. Overall, the price impact was about 7% in the first quarter of this year.