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French luxury goods group LVMH blamed lower sales of high-end cognac to China for a 5% slide in core earnings last year, but its bottom line was rescued by the sale of a stake in handbag maker Hermes.
The fashion conglomerate behind Louis Vuitton, Dior and Hennessy says its net profit soared to €5.65 billion ($6.5 billion) last year, up 64% from €3.4 billion in 2013. The company booked a €2.81 billion capital gain, selling its 23% share of Birkin bag maker Hermes last December.
LVMH said its core earnings fell 5% to €5.7 billion in 2014, after its high-end wines and spirits suffered from slower cognac sales in China. The Paris-based luxury goods empire made sales of €30.6 billion in 2014.
LVMH said operating profit at its fashion and leather goods business rose 2% to €3.2 billion while sales rose to €10.8 billion, from €9.9 billion a year earlier.
“Despite a climate of economic, currency and geopolitical uncertainties, LVMH is well equipped to continue its growth momentum across all business groups in 2015,” Bernard Arnault, the LVMH chairman, said in a statement.
Consumer spending on luxury goods continued to rise in 2014, but at a far slower pace than in previous years. That has crimped the sales of Europe’s big luxury houses, not only at LVMH but also at Richemont of Switzerland and Kering, whose brands include Gucci, Bottega Veneta and Yves Saint Laurent.