LVMH Moët Hennessy Louis Vuitton, one of the world’s leading luxury products groups, posted a 9.9% drop in worldwide sales, to 5.24 billion euros (almost $5.9 billion), in the first half of 2003. Operating income grew approximately 3%, according to a report released July 24.

LVMH said the weak dollar’s cumulative impact on sales was to blame, along with a “significant reduction in tourism following the Iraqi war and the SARS epidemic.” Nevertheless, LVMH said its “star brands” including Louis Vuitton, Parfums Christian Dior, and Hennessy “delivered a remarkable performance.”

Its Watches and Jewelry division posted a 17.6% drop in sales to 210 million euros ($240.4 million), the largest drop of any of its divisions. Within that division, however, Christian Dior and Chaumet specifically “recorded good sales growth in the first half,” says the report.

LVMH expects 2003’s second half to be more favorable. It cites “a very slight strengthening of the dollar” recently and “a slow but steady improvement” in tourism. The report says, “There could be a return to a more normal environment in the first half of 2004, barring any geopolitical or other incident between now and then. Some clear signs of a recovery have appeared in most of the Group’s activities since June.”