LVMH upbeat as luxuries taste returns

THE world is recovering its taste for luxury - and the luxury industry its knack of making money. LVMH, the world's biggest luxury goods group, today unveiled net profits ahead 24% to e265m (£186m) for the six months to June, and was optimistic about a strong finish to the year.

After 'good growth in August' led by Louis Vuitton luggage, Christian Dior perfumes and Hennessy cognac, executive chairman Bernard Arnault said: 'Unless there is a new accident, we are set for a progressive recovery.

'If the American recovery is confirmed, if Japan continues to give positive signals, and if no new geo-political accident happens we could be back to a normal situation towards the end of the first half of 2004. Europe, however, remains a grey spot.'

First-half sales fell 9.9% to e5.24bn due to the weak dollar and the impact on air travel of the Iraq war and the lethal Sars virus.

Cost-cutting, disposal of peripheral brands, and sharply reduced losses at the Sephora perfume retail chain helped LVMH raise operating margins to 17% from 14%.

Arnault's optimism is shared by several rivals. Swiss group Richemont said on Tuesday that its sales in the three months to August rose 1% after a 19% slump in April and May.