The Christian Dior and Louis Vuitton brands continued to drive the growth of Bernard Arnault’s Christian Dior group last year. Because of unfavorable currency exchange rates, its total sales, including those of LVMH, declined to €14.47 billion in 2003, as compared to the previous year, but on a comparable basis and in local currencies they increased by 5 percent. Its operating income and that of LVMH grew by more than 7 percent.

Arnault has set out the goal of achieving another “tangible” increase in results for LVMH. This diversified luxury group, which is controlled by Christian Dior, suffered a sales decline of 6 percent to €11.96 billion, but it enjoyed organic growth of 4 percent during the past year. LVMH's growth rate doubled to 8 percent in the 4th quarter, confirming the apparent turnaround of the luxury goods sector.

In particular, LVMH’s fashion and leathergoods division, which generated sales of €4,150 million, had organic growth of 9 percent in 2003 and 12 percent in the latest quarter. Louis Vuitton continued to record double-digit growth throughout the year, reaching a peak of 17 percent in December, where its weekly sales went repeatedly beyond the €100 million barrier. Vuitton, which is about to open its biggest store to date on New York’s 5th Avenue, raised its sales by 38 percent in dollars in the USA. Fendi’s sales continued to grow in the 4th quarter as its store network was upgraded. Marc Jacobs and Pucci, which have great potential, developed strongly.

As for the Christian Dior couture brand, which is not included in LVMH’s results, sales rose by 6 percent to €523 million last year, with an 11 percent uptick in the latest quarter, after the exceptional 41 percent increase posted in 2002, and its operating profit jumped by more than 20 percent. That doesn’t include Dior fragrances and cosmetics. Sales were particularly strong in Japan, where the brand has just opened a new flagship store. At constant exchange rates, Dior’s sales would have risen by 15 percent over the full year and by 20 percent in the quarter.

According to a recent French press report that could not be verified, shoes represent about 7 percent of Dior’s revenues. Sales of Dior women’s shoes, which are made under contract in Italy, jumped by about 80 percent last year, while leathergoods represent 40 percent. The Dior women’s footwear project got a strong impulse in 2001, according to this report. Dior is now considering doing something similar in men’s footwear. At the same time, Dior wants to open about 11 Dior men’s stores around the world this year, after successful openings in Milan and New York. There already more than 150 Dior stores around the world.

Meanwhile, LVMH has announced its victory in a legal battle against Morgan Stanley, accused of biased analyses of the group’s financial performance and outlook between July of 1999 and June of 2001 because of its parallel investment banking activities. Morgan Stanley advised Gucci Group in 1999 to fend off a takeover by LVMH. A Paris court has awarded damages of €30 million to LVMH in the case, less than the €100 million original demanded, but Morgan Stanley says that it will appeal. It will also suspend coverage of LVMH’s stock.