Louis Vuitton 2006 Annual Report Download - page 40

Anchored in the world of luxury, our perfume
and cosmetics brands are pursuing
a differentiation strategy that explains
their strong growth in a market threatened
by commoditization and riddled with product
introductions that can be short-lived.
Their growth is built on the upscale segment
of the market with excellent and creative
products, an exceptional image and selective
retailing. These principles, which drive their
long-term vision, will generate the continued
dynamic and profitable growth and gains
in market share that characterized
the business group's activity in 2006.
Stronger leadership in Europe, steady growth
in the United States, expansion in Asian
markets, qualitative development of the niche
brands, as well as growth in operating margin
are the objectives for the coming years.
The essence
of a perfume -
the extract
is the ultimate
expression.
36 LVM H 2 0 0 6 PERFUMES & COSMETICS
THE BUSINESS GROUP EXCEEDS ITS OBJEC-
TIVES
In 2006, the Perfumes and Cosmetics business
group significantly exceeded its performance
compared to 2005, which was already a year of
strong growth. All the brands contributed to the
growth in revenue. The increase in profit from
recurring operations exceeded objectives even
in a context of higher promotional investments.
Backed by their image of excellence, the major
French brands continued to gain market share,
through innovation as well as through the peren-
nial success of their flagship products and lines.
The newer brands in the business group's port-
folio continued to grow steadily.
PARFUMS CHRISTIAN DIOR: STRONG, BALAN-
CED AND PROFITABLE GROWTH
PARFUMS CHRISTIAN DIOR continued its rapid
and profitable growth with steady expansion in
all product categories and solid performances
in all geographic regions. The flagship brand of
the business group maintained its status as
growth leader within its competitive segment.
This success was driven by a differentiation
strategy resolutely aimed at the high end of the
selective retailing segment and the synergies
developed with fashion. Parfums Christian Dior
gained market share in the major consumer
countries - in Europe and the United States, it
recorded double-digit revenue growth - and
increased its position in the emerging markets
of China, Russia and the Middle East, where it
made solid advances.
Without a major product launch in 2006, Dior
based the growth in its perfumes on the quality
and vitality of its great classics: JAdore, which is
promoted with the face of Charlize Theron,
continued its exceptional performance; Miss
Dior Chérie, created in 2005, solidified its success.
Both fragrances were offered in extract versions
in 2006. The perfume Dior Addict also demons-
trated exceptionally dynamic performance.
Among other events, the high-growth makeup
segment benefited from the highly successful
launch of the new Rouge Dior, embodied
by Monica Bellucci, the development of the
foundation Diorskin and the strong demand for
the Collection and Backstage lines, which origi-
nated from the trends in the Dior Couture
fashion shows.
The strong growth of the beauty care segment
was generated particularly by the performances
of the core Capture line and the remarkable
success of Capture Totale, an exceptional product
represented by Sharon Stone. Capture Totale
allowed Dior to significantly confirm its exper-
tise and strengthen its position in the high-
growth anti-ageing segment. The Hydraction line
launched in 2005 in the skin hydration segment
also recorded very strong growth. Another high-
light of the year was the October launch of a
very fine line, Dermo System, a series of six skin
care products for men based on two patented
active ingredients.
Against a backdrop of higher investments for
product promotion, the growth in sales recor-
ded enabled Parfums Christian Dior to increase
its profitability once again.
LVMH is a major global player in the sector
of selective perfumes and cosmetics, with the major
French brands Christian Dior, Guerlain, Givenchy
and Kenzo. In addition to these world-renowned
brands, this business group also includes BeneFit
Cosmetics and Fresh, two young, highly innovative
and rapidly growing American companies,
the prestigious Italian brand Acqua di Parma,
Parfums Loewe and Make Up For Ever, a French
brand specializing in professional makeup products,
which has successfully started to expand its customer
base to the public.
Strategy and Objectives