Sephora steams ahead despite 13% drop in profits at LVMH

Published: 5-Feb-2010

Luxury products group LVMH has reported a 13% fall in net profits for 2009 but Jacques Levy, president of the group's perfumes and cosmetics distribution arm, Sephora, has said that the enterprise is now expected to achieve its medium-term target for operating margin.


Luxury products group LVMH has reported a 13% fall in net profits for 2009 but Jacques Levy, president of the group's perfumes and cosmetics distribution arm, Sephora, has said that the enterprise is now expected to achieve its medium-term target for operating margin.

Sephora will open as many boutiques this year as last, and speaking in Paris in an interview with Reuters, Levy said Sephora had maintained its 2009 operating margin at the same level as in 2008 despite opening 88 outlets worldwide.

No detailed figures are yet available but cosmetics sector analysts estimate Sephora's current margin is around 10%-11% with sales running at about €2.5bn. Growth in 2010 is forecast at some 4% to 5%, discounting exchange rate factors.

Levy said the 2010 openings would be carefully targeted in markets where Sephora wanted to maintain leadership – in Europe, the US and China. Market research estimates that while the market in France and the US dropped by between 2% and 5% last year, growth in China has been around 10%. Sephora will open between 20 and 30 shops in China this year after adding 25 in 2009.

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