LVMH Group Estimates The Impact Of The Epidemic: First Quarter Sales Fell Or 10%~20%

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The French luxury giant LVMH group discussed the impact of the new crown epidemic on group performance when it released the management report of the board of directors.

The group wrote: "in extremely uncertain circumstances, the group will adhere to the strategy of focusing on brand value. In the short term, in response to the epidemic response measures taken by the government, the group's production plants and stores in several countries have been closed, and the group's performance has been affected. Because they do not know when these countries will return to normal, it is not possible to accurately calculate their negative effects. "

The LVMH group will release sales figures for the first quarter of fiscal year 2020 after the closing of the Paris stock market in April 16th. In this regard, the group gave the latest forecast: compared with the same period last year, sales in the first quarter of this fiscal year are expected to decline by 10%~20% over the same period last year.

In the first quarter of fiscal year 2019, LVMH group performed well in all regions, and sales increased by 16% to 12 billion 500 million euros, an organic growth of 11%, a record high.

According to the group estimates, according to the above data, the first quarter of fiscal year 2020 sales should be 100~113 billion euros.

A month ago, when the LVMH group released its 2019 annual earnings report, Bernard Arnault, chairman and chief executive of the board of directors, said cautiously when talking about the new crown epidemic situation: "it is not yet possible to say what the final impact will be. It can be said that the negative impact of the virus will not be as serious as that of SARS in 2003. In addition, the Chinese government's response is quite fast, and its efficiency is very high, which has a great positive impact on the overall situation. We believe that this disease will be controlled in the middle of March, but all I said is what I know. "

Although China's epidemic was actually controlled in March, according to the current trend of the new crown epidemic in Europe and America, Arnault's expectations were perhaps too optimistic.

Not long ago, in order to help the French government solve the problem of hand sanitizer caused by the spread of the new crown virus, LVMH announced that the cosmetics and perfume production lines of its brand Dior (Dior), Givenchy (Givenchy) and Guerlain (Guerlain) should be temporarily changed to the washing free hand washing liquid production line. The first batch of hand washing liquid was officially delivered in March 19th.

In addition, LVMH has helped French health service providers order 40 million protective masks from a Chinese supplier. The first payment is 5 million euros for LVMH.

In addition to LVMH, many European luxury enterprises have joined the ranks of production change protection materials.

Over the past few weeks, with the expansion and intensification of the new crown epidemic in Europe and America, many luxury brands have been temporarily closed in stores in the United States, France and India. At the same time, companies are also lowering sales expectations.

The French Open Cloud group said last week that comparable sales will decline by 15% year-on-year in the first quarter of fiscal year 2020 ending March 31st, and the total sales decline will be 13% to 14%. In addition, Kai Yun group also indicated that the negative impact of the epidemic will not be ruled out in the second quarter. It is expected that the operating profit margin in the first half of the fiscal year will also decline, but the Chinese market has been gradually improving.

British luxury group Burberry also disclosed the impact of the le1 epidemic on company performance last week. In the past 6 weeks, comparable store sales fell by 40% to 50% over the past week, and sales of brands in EMEIA (Europe, Middle East, India and Africa) and the Americas market began to decline sharply in recent weeks. It is expected that the comparable store sales in the last few weeks of this fiscal year will decrease year by year as of March 28, 2020. 70% to 80%. At present, 40% of Burberry's stores are closed.