Sept. 17 (Bloomberg) -- LVMH Moet Hennessy Louis Vuitton SA, the maker of Celine handbags and TAG Heuer watches, sees no signs of slowing demand for luxury products in Europe or America, said Yves Carcelle, who runs the fashion and leather goods unit.
“Even in period of crisis, people want to treat themselves,” Carcelle, 63, said at the opening of a Louis Vuitton shop at the Marina Bay Sands in Singapore today. “We don’t see any signs of slowing down whether it’s in Europe or in America. The world of luxury doesn’t obey the same rule.”
Carcelle said there will be less net opening of stores and more investment into improving the size of stores, because “luxury retail has to be a luxurious experience.”
Three days ago, LVMH named former Danone SA executive Jordi Constans to replace Carcelle as head of Louis Vuitton at the end of 2012. Constans, 47, will work next year with Carcelle to familiarize himself with LVMH and the Vuitton brand, which Carcelle has led since 1990. The brand is opening stores in Asia to tap demand from growing numbers of wealthy Asians.
The company is expanding its store in Manila and adding one level to its Lee Gardens store in Hong Kong to double its floor space, Jean-Baptiste Debains, president of Louis Vuitton Asia- Pacific, said at the Singapore opening. It’s also making its Sydney outlet “two or three times bigger” and expanding its store in Ho Chi Minh City in Vietnam, he said.
LVMH has lost 6.4 percent to 115.25 euros in Paris trading this year, giving the maker of Moet & Chandon champagne and $6,000 TAG Heuer chronographs a market value of 58.6 billion euros ($80.9 billion).
The biggest market in the world is still Japan, while the No. 1 clientele is mainland Chinese, who shop “a lot” when they travel to places such as Singapore, Hong Kong, Macau and Paris, Carcelle said.
Luxury goods sales in China are set to rise 18 percent a year to 180 billion yuan ($28.2 billion) between 2010 and 2015, consultant McKinsey & Co. has estimated. Cie. Financiere Richemont SA said this month it sees no signs that demand is weakening in the country, after posting a 46 percent increase in Asia-Pacific sales in the five months through August.
In India, “one of the things that slows down the penetration of luxury and of course investment is the fact that today the global infrastructure, and especially the commercial infrastructure, are missing,” Carcelle said. Allowing companies to own a maximum of only 51 percent of shares in retail companies is holding back foreign investment in the country, he said.
Carcelle will become president of Fondation Louis Vuitton, an art museum that’s slated to open in 2013, LVMH said. He will remain on LVMH’s executive board and undertake strategic roles alongside Chairman Bernard Arnault, the company said.
“The succession of Mr. Carcelle had to happen one day,” Pierre Lamelin, an analyst at CA Cheuvreux, wrote in a Sept. 15 note to clients. “We are reassured by the smooth transition process over 18 months and believe that Mr. Constans has the management and brand-building skills required by the top job at Louis Vuitton.”
Net income climbed 25 percent to 1.31 billion euros in the first half, the Paris-based company said in July. The average estimate of five analysts surveyed by Bloomberg was for profit of 1.25 billion euros. Second-quarter sales advanced 9 percent to 5.05 billion euros.
--With assistance from Andrew Roberts in Paris. Editors: Ryan Woo.
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