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Currency exchange rates drag down profits at LVMH

Sales were up 3% at luxury goods giant LVMH in the first half of 2014, but profits fell as the sector suffered the adverse effects of poor exchange rates.

Revenue for the period was €14bn (£11bn), up from €13.6bn (£10.8bn) in the first half of 2013. The group’s net profit fell 4% from €1.6bn (£1.3bn) to €1.5bn (£1.2bn), with an operating margin of 18%.

Business continued to grow in Asia and the US, but foreign currency exchange rates in Europe “weighed strongly on the first half”, the group said in a statement.

Sales of fashion and leather goods across LVMH - which owns brands including Louis Vuitton, Fendi and Céline - were up 7% to €5bn (£4bn). However, profits remained flat at €1.5bn (£1.2bn).

LVMH said Louis Vuitton “continued its strong creative momentum” with new artistic director, Nicolas Ghesquière, receiving an enthusiastic response to his autumn 14 show.

As Drapers reported yesterday, Louis Vuitton will open its first European airport store at London Heathrow’s Terminal 5 this December.

Sales at Fendi “progressed strongly”, while Céline also continued to grow. Céline flagship stores opened in London, Tokyo and Paris during the first half of the year.

Bernard Arnault, chairman and chief executive of LVMH, said: “The results of the first half demonstrate LVMH’s excellent resilience, thanks to the strength of its brands and the responsiveness of its organisation in a climate of economic and financial uncertainties.”

LVMH said it had numerous product launches planned before the end of the year, as well as geographic expansion.

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