The France-based luxury goods group, which today convened its annual general meeting, announced expectations that its second-quarter profits and revenues — particularly in its major markets of Europe and the United States — will suffer as a result of the current health crisis. This impact, added CFO Jean-Jacques Guiony, will be felt “in the months and weeks to come.”
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Although it reported a record year in 2019, with revenues surging 15% to 53.7 billion euros, the company announced plans to slash its dividend by 20% to 4.80 euros in an effort to reduce costs.
“This is not because of the performance in 2019 — that was an outstanding year — but because of the COVID-19 pandemic, whose effects we are suffering and which require, from our viewpoint, a certain level of caution,” Guiony explained.
In the first quarter, LVMH — parent to high-end fashion labels Louis Vuitton, Christian Dior, Fendi and Marc Jacobs, as well as wine and spirits houses Veuve Clicquot and Hennessy — posted a 15% drop in revenues as the outbreak forced the closures of many of its stores and factories across the globe.
At the meeting, CEO Bernard Arnault added, “This impact cannot be assessed precisely at this stage because we don’t yet fully know the timetable of the return to normal in the various geographies of the group and, in particular, we don’t know when the virus will totally disappear. We can but hope that the recovery will occur gradually during the second half.”
So far, the conglomerate noted that it has seen “quite vigorous” signs of recovery in June following the widespread easing of government-mandated lockdowns in Europe as well as the United States.
“We remain imbued with our long-term vision,” Arnault explained. “We remain focused on preserving the value and the development of our brands, the image of our brands, the desirability of our products — with a very strong ambition for all our maisons.”