The evolution of sales in the Watch and Jewellery business group reflects the consequences of terminating certain manufacturing licences that did not conform with the strategy chosen by LVMH for this sector. In this context, Ebel, Zenith, Christian Dior watches and Chaumet continued to grow in September and began to see the benefits of their new strategies and innovative marketing campaigns. Suffering from the repercussions of the international economic climate, sales at TAG Heuer and Fred fell in September.

Outlook:
The dynamism of the Group's star brands, the strength of activities in Japan, reduced interest rates, the benefits of good currency cover, as well as capital gains realised from the disposal of shares, will be positive contributing factors for the group's 2001 results. They reinforce the strength of our long term strategy, which ensures the growth and stability of LVMH.

Nevertheless, the outlook for the short term remains uncertain, with the extent of the economic slowdown and the consequences of events in September still being difficult to anticipate. Since 11th September, we, like businesses in general, have seen a significant slowdown in sales in our stores in the US, Europe and Asia, while the Japanese market remains very promising. In fact, there has been a gradual improvement since the end of September. However, it remains to be seen whether this improvement will continue or if the development of the geopolitical situation will have further negative consequences on the global economy in the short term. Given these conditions, it would be premature to give estimates for full year results today. That said, we are focusing all of our efforts on reaching at least the same level of operating profitability in 2001 as we did in 2000. The Group will use this period to accelerate initiatives aiming to improve profitability, to increase productivity and develop new synergies. By maintaining levels of marketing expenditure, continuing resolutely with its policy for innovation and developing its production capacity in a controlled way, LVMH will be able to strengthen and gain market share, as it has done in previous crises.

With its strong positions, the confidence of its clientele, the talent and motivation of its teams, its world-leading portfolio of luxury brands, its coherent activities and complementary geographic presence, LVMH confirms its target of doubling its sales and operating profit between now and five years time.

Source: LVMH press release
October 2001