Profits drop at LVMH watch and jewellery division

After four years of growth and a turnaround in profitability, LVMH’s watch and jewellery division posted a decline in profit in its full-year results for 2008. Against the backdrop of a slowdown in sales, profits fell 13.4% to €118m (£106.1m).

Profits were hit by a gloomy consumer market in the US and falling demand in Japan. However, all brands increased sales in Europe and Asia, with significant growth in Russia and the Middle East, and the group maintained its overall market share.

LVMH said that it expects 2009 to be marked by difficult economic conditions and retail overstocking by a number of competing brands. It added that it has taken “appropriate measures” to prepare for these tough conditions.

LVMH bought watchmaker Hublot in April 2008 and said that the brand has maintained strong momentum since then, and has continued its industrial integration plan with the construction of a manufacturing plant in Nyon, Switzerland. The group added that the brand, which opened its first boutiques in Geneva, Shanghai and Kuala Lumpur, has increased its revenue and profitability in line with projections, despite the economic downturn. 

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