heads LVMH Sephora as growth slows for Louis Vuitton

  PARIS, France - Justine Sassier would not be caught dead buying a Louis Vuitton bag.

"You have no choice," the 18-year-old art student named said $ 1.340 handbags Monogram brand when shopping on the Champs Elysees in Paris.

Luckily for the owner Vuitton, LVMH Moet Hennessy Louis Vuitton SA, the crazy Sassier € 13.90 ($ 18) from Sephora foundation, perfume sold is a rapidly growing company and cosmetics. "I love her makeup," she said. "And that is a reasonable price."

With sales growth slowing Vuitton Barcelona to Beijing, the purchaser of the beauty found as Sassier is increasingly important for LVMH. Curb as buyers spend $ 940 Neverfull bags splurge on $ 31 Dior Addict Lipstick, Sephora is unit of LVMH Selective Retailing beyond fashion and leather goods, as his biggest business in 2018, estimates Sanford Bernstein. This can be better than its competitors like LVMH PPR SA Weather laid stagnant demand luxury.

"Sephora is a category killer," Sanford Bernstein analyst Mario Ortelli said. Investors fear that sales are fading to keep Vuitton brand "LVMH careful."

The owner of more than 60 brands - Dom Perignon Champagne Bulgari Jewelry - LVMH reported in April, the lowest fashion and leather goods sales in more than three years. The shares are up 1.6 percent this year in Paris, against an increase of 19 percent for PPR and an increase of 20 percent for Cie. Financiere Richemont SA.

LVMH Selective Retailing division, which includes Paris department store Le Bon Marché and operator of duty-free shops DFS and Miami Cruiseline Services, accounted for 28 percent of 2012 sales.

Ortelli recommend buying LVMH and PPR maintenance. LVMH sales by 7.5 percent moved forward this year, according to estimates compiled by Bloomberg. This is faster than analysts predicted growth of 5.2 percent for PPR.

Sephora is the introduction of services such as mobile payments and expand their own label, to keep the consumer sector. It also expands in Latin America and Asia, to attract consumers to the middle class, to stimulate growth in emerging markets.

However, PPR is from the supermarket. The company aims to spin off its media and electronics chain Fnac and have online fashion provider La Redoute this year. It is also close to shops and sporting goods manufacturer Puma SE, as she fights falling non-luxury sales.

LVMH Selective Distribution division has an annual turnover of 14.7 billion € 2017, estimates Sanford Bernstein. 13 percent annual growth of income of the unit, driven by Asian and Latin American customers, nearly double the estimate of the company for the LVMH fashion bags business "and about three euros monitor forecasts for luxury in general.

Slowing demand for luxury is not unique to LVMH. After Bulimia property of Rolex watches Hermes Birkin bags, consumers reduced their spending as the failure of the economy. The consumption is lower in Europe, Taiwan and Korea, "China is not as dynamic as it was two years ago was," PPR Chief Financial Officer Jean-Marc Duplaix said in April by Brand Gucci reported its lower sales growth since 2009, excluding currency fluctuations.

However, Sephora and DFS are growing. New stores in Shanghai and Hong Kong have a 17 percent sales splurge in the first quarter compared to the selective-commerce as an emerging middle class in the region on similar goods fueled Bobby Brown cosmetics and Johnnie Walker whiskey. LVMH fell executives available to discuss the business.

Offers a wide range of treatments and fragrances was the key to the success of Sephora, since it was founded in 1969. Takeover by LVMH in 1997 it was the largest retailer in the beauty of the world, with around 1,300 branches in 27 countries. Sephora plans to open approximately 120 stores by the year 2017, estimates Sanford Bernstein.

There are no multi-competitor who covers the support of LVMH as many regions as Sephora and Ulta competitors such as the United States and in France Nocibé SA do not have the resources they enjoy. Sephora has 27 percent of the retail market of beauty in France, 12 percent in the U.S. and 15 percent in China, Sanford Bernstein said.

At the end of the Sephora on the Champs Elysées € 30.30 Dior products like false eyelashes "iconic" a line of house-label extensions retailers sits down € 9.90. Known brands, loyalty cards and services such as nail bars near the entrance lure shoppers inside, while the organization provides goods by the customer to choose between similar products to a wide range of prices.

"Their business model is very clever," said Joel Palix, president of Clarins Fragrance Group sells Thierry Mugler fragrances from Sephora. Storage means Sephora exclusive products may restrict discounts, and private label merchandise margins are high, he said.

It's a similar story at DFS. The company was founded in 1960, and LVMH bought a stake in 1996. Today, the distributor sells more than 100 brands of Juicy Couture for Absolut vodka, in 14 countries. New and improved shops in airports and shopping areas of the city where travelers can buy goods and a refund of VAT when they leave the country, which means "DFS well positioned to benefit from the growth in Asian tourism," said Magali Dubreil , an analyst at Planet Retail researcher.

While the benefits of selective distribution to increase the pace of LVMH's fashion and leather goods division before interest and taxes by 24 percent per year until 2017, three times, according to Sanford Bernstein, the less profitable than other parts of the business. Vuitton alone represents more than 5.9 billion euros half of LVMH's operating profit in 2012, Exane BNP Paribas estimates. The advantage of selective distribution is € 854 million last year - or 14 percent of LVMH.

But the mass market of LVMH Sephora and DFS provides an attractive investment Vuitton raises prices, more leather in their collections and limit the expansion of the business in order to appear more exclusive, says Exane BNP Paribas analyst Luca Solca.

Perfumes and cosmetics are the main tool to attract customers ambitious Solca said. In hundredths of a lipstick costs the price of a Vuitton handbag and a thousandth of a window, "perfumes and cosmetics is the luxury of the masses," he said.