LVMH(US:LVMUY)2020-07-27 21:42Financial Data and Key Metrics Changes - The company reported a 27% drop in revenues for the first half of 2020, with all business segments experiencing negative impacts, particularly in travel retail-intensive sectors like jewelry and distribution [44][63] - The gross margin decreased by 430 basis points, attributed to depreciation of unsold products and under absorption of fixed costs in manufacturing [48][49] - Profit from recurring operations fell 68% to €1.671 billion, with significant losses reported in selective distribution [56][63] Business Line Data and Key Metrics Changes - Wines and Spirits revenue decreased by 20%, with organic revenue down 23%, while profit from recurring operations fell 29% to €551 million [7][9] - Fashion and Leather Goods revenue was €7.99 billion, a decline of 23%, with profit from recurring operations down 46% to €1.77 billion [16][44] - Perfumes and Cosmetics revenue fell to €2.3 billion, a decline of 29%, resulting in a loss of €30 million [22][25] - Watches and Jewelry revenue dropped 38% to €1.3 billion, with a reported loss of €70 million [27][30] - Selective Retailing revenue declined 32% to €4.84 billion, with a loss of €308 million [33][36] Market Data and Key Metrics Changes - The geographical performance showed a stark contrast, with Europe, Japan, and the U.S. experiencing drops of 40% to 50% in Q2, while Asia saw a significant rebound [47][44] - In China, the Fashion & Leather business was flattish in Q2, with strong growth for brands like Dior and Vuitton [79][80] Company Strategy and Development Direction - The company is focused on maintaining value creation strategies while navigating uncertain conditions, emphasizing product innovation and increasing online sales [14][15] - There is a commitment to environmental sustainability initiatives across all business groups [15][41] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about recovery trends, particularly in local markets, while acknowledging ongoing challenges in travel retail [72][74] - The company is prepared to adapt to changes in the operating environment and is focused on controlling costs [71][74] Other Important Information - The company has undertaken numerous initiatives to combat COVID-19, including adapting production facilities for essential supplies [37][41] - The company remains committed to diversity and inclusion within its workforce [38][40] Q&A Session Summary Question: Operating deleverage and trading outlook - Management indicated uncertainty regarding operating deleverage and emphasized the need to manage costs effectively while preparing for recovery [68][70] Question: Recent trends in China and the U.S. - Management noted strong performance in China, particularly for key brands, while the U.S. showed positive recovery trends in June [79][81] Question: Gross margin and depreciation concerns - Management acknowledged a cautious approach to depreciation due to unsold seasonal products and the impact of store closures [82][84] Question: Tiffany acquisition and potential duty increases - Management confirmed that antitrust filings for the Tiffany acquisition are underway, with no clear timeline for completion [91][92] Question: Digital innovation and customer engagement - Management highlighted ongoing investments in digital capabilities and CRM to meet evolving customer expectations [100][106]