- Prachi Singh |
Sales for the year to March 31, 2018 at Richemont increased by 3 percent at actual exchange rates and by 8 percent at constant rates to 10,979 million euros (12,967.7 million dollars), which the company said, were driven by jewellery. Excluding exceptional watch inventory buy-backs from multi-brand retail partners, amounting to 203 million euros (239,7 million dollars) in the year under review and 278 million euros (328 million dollars) in the prior year, sales at constant exchange rates rose by 7 percent. Gross profit increased by 5 percent to 7, 150 million euros (8,444 million dollars) in value terms.
“An improved macroeconomic environment, steady progress on Richemont’s transformation agenda and a mixed currency environment marked the year under review. Richemont’s voluntary tender offer for the world’s leading online luxury retailer Yoox Net-A-Porter Group aims to accelerate our ability to satisfy today’s sophisticated and globally dispersed clientele and demonstrates our commitment to developing a robust omnichannel proposition,” said Johann Rupert, Chairman, Compagnie Financière Richemont SA, in a statement.
Review of Richemonts fiscal year performance
Gross margin improved by 120 basis points to 65.1 percent. Operating profit grew by 5 percent with an operating margin of 16.8 percent. Excluding one-time net charges of respectively 208 million euros (245.6 million dollars) in the year under review and 109 million euros (128.7 million dollars) in the prior year, operating profit, Richemont said, would have increased by 10 percent.
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Profit for the year rose by 1 percent to 1, 221 million euros (1,441.8 million dollars), reflecting a higher operating profit and a higher effective tax rate. Earnings per share (1 A share/10 B shares) increased by 1percent to 2.158 euros (2.548 dollars) on a diluted basis.
The 2017 dividend of 1.80 Swiss franc (1.80 dollar) per A share and 0.18 Swiss franc (0.18 dollar) per B share was paid in September 2017 and amounted to 1, 016 million Swiss franc (1,015 million dollars) or 918 million euros. The board has proposed a dividend of 1.90 Swiss franc (1.90 dollars) per 1 A share/10 B shares.
Richemont’s results in core operating markets
In the year under review, full year sales in Europe declined by 2 percent, adversely impacted by the relative strength of the euro, inventory buy-backs in the fourth quarter of the year, tight inventory control at the external points of sale of the Group’s multi-brand retail partners and the optimisation of the wholesale distribution network. Sales in France contracted and were in line with prior year in Switzerland. The United Kingdom saw positive growth. Sales of all product lines were broadly in line or positive, compared to prior year, with the exception of watches. Retail sales growth was subdued, whilst sales in the wholesale channel declined.
Sales in Asia Pacific registered a double digit growth led by China, Hong Kong, Korea and Macau, and, at product level, driven by jewellery and watches. Both retail and wholesale channels saw double-digit growth.
Sales in the Americas grew by 8 percent, driven by strong retail sales, supported by jewellery and clothing. Retail sales also reflected increased online sales and the favourable full year impact of the reopening of the Cartier flagship store in New York in September 2016. Wholesale and watch sales both declined, impacted by inventory management initiatives.
Japan posted a 6 percent increase in sales, impacted by increased tourism purchases and softer comparative figures and the full year contribution from the reopened Cartier and the newly opened Piaget and Van Cleef & Arpels flagship stores, all in Ginza, Tokyo.
Sales in the Middle East and Africa increased by 2 percent, benefiting primarily from higher tourist spending but were adversely impacted by inventory buy-backs and geopolitical uncertainties. Jewellery, watches and writing instruments posted moderate growth.
Retail sales inprove, wholesale down 1 percent
The contribution of retail sales, through the Maisons’ online stores and 1,123 directly operated boutiques, increased to 63 percent of Group sales, up from 60 percent in the prior year. The double-digit growth generated in the retail channel was fuelled by jewellery and watches with six net store openings including the internalisation of external points of sales. All regions experienced double digit growth, with the exception of Europe, which posted subdued growth.
The Group’s wholesale business, including sales to franchise partners, reported a 1 percent decline. All regions other than Asia Pacific showed lower sales, impacted by the watch inventory management initiatives. At actual exchange rates, sales at Cartier and Van Cleef & Arpels were driven by high single digit growth in jewellery and double digit growth in watches, on the back of the prior year’s exceptional inventory buy-backs and the success of the relaunched Panthère collection, both at Cartier. The company added that performance of the Jewellery Maisons’ directly operated boutiques and, regionally, Asia Pacific and the Americas were particularly noteworthy.
Richemont appoints Eric Vallat Head of Fashion & Accessories
Richemont has also announced the appointment of Eric Vallat to the newly created role of Head of fashion & accessories maisons and will join the Group’s senior executive committee, effective 1 June 2018. Vallat will report to Jérôme Lambert, Richemont’s Chief Operating Officer.
A graduate from the HEC business school (France), the company said, Vallat brings over 20 years of managerial experience across Louis Vuitton Europe, Christian Dior Couture Japan, Bonpoint and J.M. Weston and, since 2014, Rémy Martin as CEO. In his latest position, Vallat was also a member of the Rémy Cointreau Group’s executive committee and, since 2016, chairman of Mount Gay Rum.