Coach, Richemont and Tiffany have all signaled a certain fatigue in the demand for their expensive products lately in the USA and Japan. Richemont, parent company of Cartier and Montblanc, said its sales growth in local currencies declined to 12 percent in December, although the 4th quarter showed an overall increase of 14 percent.

LVMH and Hermès both reported slow growth in Japan recently, but Bernard Arnault, president of LVMH, said all its divisions continued to grow by double digits in January. He predicted that his group would be affected only slightly or not at all in the event of a possible recession in the USA, but the Conference Board in the USA says a recession is unlikely.

Addressing rich people who tend to overlook price when they buy unique or high-quality products, LVMH doesn’t hesitate to propose a Christian Dior watch at €16,000 or a €1,500 Veuve Clicquot champagne bottle covered with alligator or ostrich leather. On the other hand, Louis Vuitton and other house brands are investing heavily in their development in China and other emerging markets, which last year represented half of its overall sales growth.

LVMH has reported an 8 percent increase in net profit for 2007 to a record level of €2,025 million on 8 percent higher revenues of €16.48 billion. The operating profit of continuing operations rose by 12 percent, improving to a margin of 22 percent, and it would have risen by 20 percent if exchange rates had not changed. LVMH’s parent company, Christian Dior, has reported a 12.5 percent increase in operating profit to €3.61 billion, with a 32 percent gain to €74 million for the Dior brand on 8 percent higher sales of €787 million.

LVMH’s fashion and leathergoods division posted a 12 percent increase in operating profit to €1,829 million on 8 percent higher revenues of €5,628 million, with Louis Vuitton again showing an exceptional level of profitability. Its results in Asia have been extraordinary. The brand entered three new markets – Cyprus, Aruba and Panama – and opened 22 new stores, growing to a network of 390 doors. This year Vuitton will enter four new markets – Romania, Finland, Qatar and Bahrein. It will launch its first film and TV spot, to be aired in 13 languages, revolving around the theme of travel.

In commenting on the results, LVMH’s management had good words about brands such as Donna Karan, Fendi and Berluti, which has expanded its production in Ferrara, Italy. LVMH wants to double its stock market value again over the next five years, but no major new acquisition is in the works.

Hermès has not yet discussed its profitability, but says a good second half, where its sales grew by 16.2 percent, helped the company to score a 12.5 percent increase in constant currencies in 2007. In euros, sales rose by 7.3 percent to €1.62 billion for the year. Clothing and accessories, including footwear, showed a 13 percent increase.

The company is predicting a sales increase of 10 percent in 2008, driven in part by the opening or renovation of about 40 stories, especially in the USA and China. Hermès’ first store in India will see the light in New Delhi.