- Prachi Singh |
In the six-month period, sales increased by 15 percent at actual exchange rates or by 3 percent at constant exchange rates at Richemont. The increase, the company said, reflected the continued demand for jewellery and to a lesser degree for leather goods and clothing, as well as the strong performance of its own boutiques. However, overall demand for watches was weak.
“Richemont results for the first half were satisfactory. Strong growth in our Maisons’ retail sales compensated for the decline in wholesale demand, which was principally driven by the Asia Pacific region. Jewellery sales grew strongly; this product area now accounts for one third of the Group’s sales. Operating profit in the period increased by 6 percent and this growth and the movements in currency gains and losses contributed to a net profit increase of 22 percent. On October 5, the merger of The Net-A-Poerter Group with Yoox Group was completed,” said Johann Rupert, Chairman of Richemont.
Adding further, he said, “In the month of October, sales decreased by 1 percent at actual exchange rates. In constant currency terms, sales decreased by 6 percent. The patterns seen in the first six months in terms of geography, product and channel mix were accentuated during the month. For the second half of the year, we expect the situation, particularly in wholesale, to continue to be challenging.”
Reports rise in gross profit for H1
Gross profit increased by 13 percent and accounted for 65 percent of sales. The increase in operating expenses reflected good cost control amid adverse exchange rate effects. Operating profit increased to 1, 390 million euros (1,512.4 million dollars) in the six-month period; at 24 percent.
Profit for the period increased by 22 percent or 196 million euros (213.2 million dollars) to 1, 103 million euros (1,200 million dollars). Earnings per share increased by 22 percent to 1.949 euros (2.12 dollars) on a diluted basis.
Europe and Japans support growth momentum
In regional terms, Europe and Japan continued to report very strong growth, whereas Asia Pacific posted a significant decline, primarily due to weakness in Hong Kong and Macau.
Europe accounted for 33 percent of overall sales. Sales growth in the region benefited from good levels of tourism, helped by the weakness of the euro versus the US dollar and other currencies. Retail sales to Europeans during the period showed good growth. Sales in the Asia Pacific region accounted for 34 percent of the Group total, with Hong Kong and mainland China the two largest markets. The significant sales decline in Hong Kong and Macau during the period was partly offset by positive developments elsewhere. In particular, mainland China resumed growth with strong retail sales, largely offsetting challenging wholesale sales.
The Americas region reported subdued demand overall, with lower watch sales offset by growing sales in jewellery, clothing and leather goods categories. Japan reported strong momentum, both from local and tourist demand, helped by the favourable exchange rate movements. In spite of challenging comparative figures and unfavourable exchange rate movements, markets in the Middle East and Africa continued to report growth.
Retail segment on the strong growth path
Retail sales, comprising directly operated boutiques and e-commerce, increased by 26 percent. With 54 percent of Group sales, retail sales growth continues to exceed the growth in wholesale sales. The rates of sales growth in Europe and Japan were notable, reflecting strong demand across jewellery and leather goods. The growth in retail sales partly reflected the positive impact of renovations and the addition of 26 internal boutiques to the Maisons’ network, which reached 1, 159 stores.The Group’s wholesale business, including sales to franchise partners, reported slower growth. The period’s performance reflected the caution of the company’s business partners, particularly in Asia Pacific where the environment continues to be challenging.
Sales at the jewellery brands Cartier, Van Cleef & Arpels and Giampiero Bodino – grew by 18 percent overall. Within their own boutique networks, the Maisons reported growth, including watch sales. Sales of their watch collections through the wholesale channel were lower in the period, primarily due to the challenging environment in certain Asia Pacific markets.
The Specialist Watchmakers’ sales increased by 8 percent overall, with favourable exchange rate effects offsetting lower sales in local currencies. The decrease largely reflected cautious sentiment among business partners in the Asia Pacific region. Other’ includes Montblanc, the Group’s fashion and accessories businesses and the Group’s watch component manufacturing activities. The reported operating losses were reduced to 11 million euros (11.9 million dollars), primarily due to positive performances at Montblanc, Chloé and Peter Millar.