LVMH loses fizz as wine sales drop

LVMH, the biggest player in the luxury goods market, yesterday reported a 23 per cent slump in first half profits as the downturn hit discretionary spending.<br /><br />The group, which owns the Dom Perignon brand, was dragged down by its wines and spirits division which suffered a record 41 per cent drop in profits as champagne revenue was hurt by high stock levels at distributors. <br /><br />Profits from recurring operations dropped to &euro;1.36bn (&pound;1.17bn), down from &euro;1.54bn a year earlier.<br /><br />Charles Stanley analyst Sam Hart said: &ldquo;Corporate related spending on champagnes and luxury drinks for parties has definitely been cut back during the downturn, but a 40 per cent drop is extreme.&rdquo;<br /><br />Earnings from the group&rsquo;s watches division plunged 73 per cent as the luxury goods industry &ndash; which is worth $240bn globally &ndash; felt the pinch.<br /><br />Total sales inched up by just 0.2 per cent in the first half to &euro;7.81bn, driven by gains at LVMH&rsquo;s fashion and leather goods business, including double-digit percentage sales growth at fashion house Louis Vuitton. <br /><br />The group said it hopes to steal market share from its rivals in the next quarter by launching a raft of new products.