LVMH estimated losses from the sale of Sephora in Russia at 210 million euros

The world’s largest manufacturer of luxury goods Louis Vuitton Moët Hennessy (LVMH) published The company reported that the conflict in Ukraine and the subsequent sanctions did not have a significant impact on LVMH, but the holding lost 210 million euros due to the sale of the Sephora cosmetics chain in Russia.

“Losses are mainly related to the sale of Sephora to the management of a subsidiary in Russia in October 2022,” LVMH said in a report.

The company recalled that the activities of LVMH in the Russian Federation were suspended in March 2022 against the backdrop of Russia’s special operation in Ukraine. Despite the fact that the holding’s stores in the country were closed, employees continued to receive salaries.

It is noted that the assets of LVMH in Russia are mainly associated with commercial equipment and store equipment. Lease agreements, the company added, were renegotiated as of December 31, 2022, taking into account the circumstances that have arisen, resulting in a “partial impairment”. The report says that this is a small amount.

At the same time, LVMH reported that in 2022 the company’s revenue was a record and amounted to 79 billion euros, which is 23% higher than in 2021. Net income was 14 billion euros. Free cash flow of LVMH decreased by 33.6% in annual terms and amounted to 10.1 billion euros.

For the first time in history, Louis Vuitton brand revenue exceeded 20 billion euros. In addition, the company recorded significant business growth in Europe, Japan and the United States.

Most of the company’s revenue was provided by fashion brands – 38.6 billion euros. Sales of watches and jewelry amounted to 10.5 billion euros, and perfumes and cosmetics – 7.7 billion euros. Revenue from the sale of wines and spirits amounted to 7 billion euros, another 14.8 billion euros came from retail sales.

LVMH owns such brands as Louis Vuitton, Fendi, Givenchy, Marc Jacobs, Kenzo, Christian Dior, Guerlain, Hublot, Tiffany & Co and others. The holding’s well-known spirits brands include Moët & Chandon, Krug, Veuve Clicquot and Hennessy.

At the beginning of March 2022, LVMH temporarily closed all of its stores in Russia. At that time, the company owned 88 Sephora stores in 37 Russian cities, 26 of them in Moscow. This summer, it became known that Sephora’s local business will be bought out by the company’s CEO Evgeny Drozdov. The deal was completed on October 7, two sources close to the parties told Vedomosti. After that, the shops were renamed in Ile de Beaute.