Louis Vuitton 2005 Annual Report Download - page 53

PASSIONATE ABOUT CREATIVITY
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LVMH 2005 SELECTIVE RETAILING
The Selective Retailing businesses developed
within LVMH are present in Europe, North
America and Asia. They operate in two
segments: distribution to international travelers,
which is the business of DFS and Miami
Cruiseline, leaders in their markets, and selective
retailing concepts represented by Sephora,
the most innovative company in the beauty
segment, and Le Bon Marché, the prestigious
Parisian department store on the Left Bank.
In 2005, the Selective Retailing businesses expanded their growth in
all regions of the world. The overall results improved significantly,
demonstrating the effectiveness of the projects completed in order to
improve the profitability of each brand and, in particular, the increased
competitiveness of our businesses within their respective markets.
For reasons of safety and precaution, la Samaritaine closed its store to
the public in June 2005. Based on the conclusions of several studies and
after consulting employee representatives, it was decided that the store
should remain closed during restructuration and renovations, expected
to last approximately 6 years, to bring the building into compliance.
It is the intent of management that after such time, the commercial
nature of the site will be continued through the creation of a major
commercial complex of high architectural interest adapted to an urban
environment and the needs and lifestyle of the 21st century.
DFS EXPANDS ITS CUSTOMER BASE Driven by the improve-
ment in its performance on a same-store basis and by the full-year activity
of the Okinawa Galleria opened at the end of 2004, DFS recorded
double-digit revenue growth. Its profitability surged thanks to this
momentum and to continued, rigorous cost management.
The Galleria opened in Okinawa, Japan, is a strategic store, representa-
tive of a key step in the development of DFS. Within a single location,
it houses an exceptionally attractive set of brands and offers our Japanese
customers, whose demand for luxury products is very strong, a quality
of service and atmosphere that can meet the most demanding expec-
tations. This space, with a particularly luxurious offering and décor,
is representative of the DFS strategy to achieve a more upmarket
positioning.
2005 was also marked by an increase in the flow of Chinese travelers. In
order to anticipate and meet the demands of these new customers, who
constitute a strong growth driver, DFS has specially adapted the prod-
uct and service offerings of its stores in Hong Kong and Singapore, and
in other destinations popular with these travelers. The opening of a
store at the Hainan Airport, a tropical island where tourism is booming,
will allow DFS to strengthen its presence in this region with high growth
potential.
MIAMI CRUISELINE ENHANCES ITS POSITIONS Miami
Cruiseline continues to increase its sales and profitability, thanks to the
improved visibility of its shipboard boutiques and the higher quality of
its product offering. The American company, which holds strong posi-
tions in the cruise market, continues to refine its sales strategies and
to optimize the quality of the service it offers to its customers. Against
a backdrop of strong growth in the cruise market, all these initiatives
generated a substantial increase in average purchases per passenger.
SEPHORA INCREASES ITS MOMENTUM AND EXPANDS
INTO THE ASIAN CONTINENT Sephora has completed an
historic year, gaining market share and exceeding its revenue and earn-
ings targets both in Europe and the United States. The cash flow gener-
ated in each of these regions will finance business expansion in Asia.
As of December 31, 2005, Sephora had a global network of 558 stores.
Sephora continued its European expansion with a net total of 10 new
stores. In France, a market with few changes, its dynamic vitality and
strong policy of innovation generated exceptional revenue growth in
its competitive market. The e-commerce site sephora.fr was launched
in June 2005 with immediate success. Sephora also confirmed its momen-
tum in Poland where it holds very strong positions. In 2005, a joint
venture with the Spanish department store group, El Corte Inglés, was
also implemented: two stores were opened as part of this collaborative
project, along with four Sephora “corners” within El Corte Inglés stores.
In the United States, Sephora recorded double-digit revenue growth
for the fifth consecutive year. Twenty-four stores, including one in
Union Square, New York, were opened (net) across the Atlantic in
2005. The website sephora.com continued to boost its brand recogni-
tion with American consumers and confirmed its success with a very
sharp jump in its revenue.
Finally, in 2005, Sephora began its successful expansion into China in
April and opened three stores in Shanghai.