Louis Vuitton 2011 Annual Report Download - page 152

LVMH 2011
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Finance
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COMMENTS ON THE CONSOLIDATED
INCOME STATEMENT
Consolidated REVENUE for the year ended December 31,
2011 was 23,659 million euros, up 16% from the previous year. It
was aected by the depreciation of the main invoicing currencies
against the euro, in particular the US dollar, which fell by 5%.
The following changes have been made in the Group’s
scope of consolidation since January 1, 2010: in Perfumes and
Cosmetics, La Brosse et Dupont was deconsolidated in the third
quarter of 2010; in Wines and Spirits, Montaudon was decon-
solidated as of January 1, 2011; in Watches and Jewelry, Bulgari
was consolidated with eect from June 30, 2011; and in Selective
Retailing, Ile de Beauté, one of the leading perfume and
cosmetics retail chains in Russia, was consolidated, with eect
from June 1, 2011. These changes in the scope of consolidation
made a positive contribution of 4 points to revenue growth for
the year.
On a constant consolidation scope and currency basis,
revenue increased by 14%.
The breakdown of revenue by business group changed
appreciably following the consolidation of Bulgari in Watches
and Jewelry in the latter part of 2011, with the contribution of
Watches and Jewelry to consolidated revenue increasing by
3 points to 8%. The contributions of Wines and Spirits and
Perfumes and Cosmetics declined by 1 and 2 points to 15% and
13%, respectively, while those of Fashion and Leather Goods
and Selective Retailing remained stable, accounting for 37%
and 27% of consolidated revenue, respectively.
Wines and Spirits saw an increase in revenue of 8% based
on published figures. Revenue for this business group increased
by 10% on a constant consolidation scope and currency basis,
with the net impact of exchange rate fluctuations and the net
impact of changes in the scope of consolidation lowering Wines
and Spirits revenue by 2 points. Group brands successfully took
advantage of the recovery in consumer spending, boosting their
revenue while making product mix improvements in line with
their value-oriented strategy. Surging demand in Asia made a
particularly significant contribution to the strong upturn in
revenue. China is still the second largest market for the Wines
and Spirits business group.
Fashion and Leather Goods posted organic revenue growth
of 16%, and 15% based on published figures. This business
group’s performance continues to be led by the exceptionally
powerful momentum of Louis Vuitton, which again recorded
double-digit revenue growth. Céline, Loewe, Givenchy, Fendi,
Donna Karan and Marc Jacobs also confirmed their potential,
delivering double-digit revenue growth in 2011.
Revenue for the Perfumes and Cosmetics business group
increased by 9% on a constant consolidation scope and currency
basis, and by 4% based on published figures. All of this business
group’s brands performed well. This rebound illustrates the
eectiveness of the value-enhancing strategy resolutely pur-
sued by the Group’s brands in the face of competitive pressures
spawned by the current economic crisis. The Perfumes and
Cosmetics business group saw considerable revenue growth in
both the United States and Asia, particularly in China.
Revenue for the Watches and Jewelry business group
increased by 23% on a constant consolidation scope and
currency basis, and by 98% based on published figures. The
consolidation of Bulgari with eect from June 30, 2011 boosted
the business group’s revenue by 72%. Inventory increases by
retailers and the recovery in consumer demand helped to drive
stronger revenue. For all of this business group’s brands, Asia
and the United States were the most dynamic regions.
Based on published figures, revenue for the Selective
Retailing business group increased by 20%, and by 19% on a
constant consolidation scope and currency basis. The negative
impact of exchange rate fluctuations was more than oset by
the positive impact resulting from the consolidation of Ile de
Beauté, the Russian perfume and cosmetics retail chain. The
main drivers of this performance were Sephora, which saw con-
siderable growth in revenue across all world regions, and DFS,
which made excellent progress, spurred in particular by the
continuing development of Chinese tourism boosting business
at its stores in Hong Kong, Macao and Singapore.
The Group posted a GROSS MARGIN of 15,567 million
euros, up 19% compared to the previous year. As a percentage of
revenue, the gross margin was 66%, an increase of 1 point over
the previous year, mainly attributable to tight control over the
cost of goods sold.
Marketing and selling expenses totaled 8,360 million euros,
up 18% based on published figures, amounting to a 14% increase on
a constant consolidation scope and currency basis. This increase
was mainly due to higher communications expenditures by the
Group’s main brands, but also to the ongoing development of
the Group’s retail networks. Nevertheless, the level of marketing
and selling expenses remained stable as a percentage of revenue,
at 35%. Among these marketing and selling expenses, advertising
and promotion represented 12% of revenue, an increase of 16%
on a constant consolidation scope and currency basis.
General and administrative expenses totaled 1,944 million
euros, up 13% based on published figures, and up 12% on a con-
stant consolidation scope and currency basis. They represented
8% of revenue, remaining stable compared to 2010.
The Group’s PROFIT FROM RECURRING OPERATIONS
was 5,263 million euros, up 22% compared to 2010. The Group’s
operating margin as a percentage of revenue increased by
1 point to 22%.