PARIS, Mar 10, 2002/ --- Last week Pinault-Printemps-Redoute announced its slip in 2001 profits. Last Friday, it's LVMH's turn and the news is even more grim.

Bernard Arnault's luxury goods company saw its net profit plummet 99 percent last year, from 722 million euros ($632 million) to a mere 10 million euros ($8.7 million).

Despite LVMH's recent profit warnings, analysts were still expecting to see a net profit of around $612 million. Gains were vastly diminished, however, by new provisions instituted to revive the company's unprofitable luxury retail stores, DFS and Sephora, "in the shortest possible time."

LVMH did not specify the exact size of these restructuring and other charges, but revealed that the units recorded an operating loss of about $175 million this year.

Last year, before the travel and tourism industry's struggle in the wake of September 11, DFS and Sephora saw losses of less than $2 million.

Although CEO Bernard Arnault has said in the past that he does not consider these businesses part of LVMH's core business, fueling speculation of sell-offs, he told a Paris press conference today that "now is not the time to sell DFS and Sephora."

LVMH said its operating profit dropped an expected 20 percent, to about $1.36 billion, with all divisions except leather goods and fashion reporting losses.

"Louis Vuitton, Hennessy, Christian Dior and Kenzo were the main growth drivers - as during the Gulf War and the Asian crisis, they were illustrative of the group's impressive ability to come through periods where the economic climate is difficult," today's statement read.

LVMH's 2001 figures also included sizeable capital gains, including about $756 million from the sale of its Gucci Group shares to PPR.

As market conditions are showing signs of improvement, the luxury goods company has seen sales up nine percent for the first two months of 2002.

LVMH is still wary of the current economic outlook though and its objective for the coming year is only to "significantly increase operating income."

It looks like LVMH's acquisition days are over. The company said in its statement today that it will "concentrate on organic growth, profitability and cashflow in 2002."

Last month, LVMH reduced its 75 percent stake in Phillips auction house to only 27.5 percent. So far, investors are very positive about the company's new efforts to focus on its core luxury businesses. Shares were down only 3.5 percent in this afternoon's trading.