LVMH suffers at departure gate

March 8, 2002 Posted: 5:19 AM EST

PARIS, France (CNN) - Luxury brands group LVMH Moet Hennessy-Louis Vuitton said on Friday profit tumbled after a sharp decline in travel following September's terror attacks.

France's LVMH, whose brands range from Givenchy and Kenzo in fashion to Louis Vuitton luggage and Moet & Chandon champagnes, is reliant on tourism for much of its sales but a slowing global economy has damaged profits.

And the attacks on the 110-storey World Trade Center buildings and Pentagon have not helped matters at its DFS duty free stores around the world. It plans to close the some DFS store and return the business to profit in the second-half of this year.

Annual net income fell to 10 million euros ($9 million) from 722 million euro a year ago. Analysts polled by JCF Group had expected profit to decline to 650 million euros.

Operating profit fell to 1.56 billion euros, in line with the company's guidance when it issued a profit warning in January, from 1.959 billion euros in 2000.

LVMH, the world's biggest luxury goods maker, which has been expanding its global presence and brand with the acquisition of Donna Karen and Fendi last year, repeated its undertaking to "significantly improve'' operating profit in 2002 and said it planned to concentrate in 2002 on internal growth, profitability and cash flow.

Its cosmetic chain Sephora posted a 194 million euro loss from 2 million in 2000. LVMH, which invested heavily in the brand and withdrew from Germany and Japan, now expect the business to break even in 2003, while 2002 is forecast to be "very slightly negative."

Operating profit at Louis Vuitton leather goods rose 9 percent to 1.27 billion euros.

LVMH's stock slipped 0.3 percent to 59.60 euros in early Paris trading on Friday.

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