Dive Brief:
- Compagnie Financière Richemont SA reported Q3 sales of 5.6 billion euros, or approximately $6.1 billion at current exchange rates, representing an increase of 4%, according to a Thursday press release.
- Sales for the quarter grew 8% year over year in Asia Pacific and Japan, while sales in the Middle East and Africa grew 5%, and sales in the Americas grew 3%. However, sales in Europe dropped 4% for the period as “higher sales to Chinese and domestic clienteles did not compensate for an overall reduction in tourist spending, notably from Americas resident clients,” per the release.
- In the accompanying trading update presentation for its Q3 earnings, Richemont said it would continue to review “strategic options aimed at finding a new controlling shareholder” for its Yoox Net-a-Porter e-commerce platform after the deal to sell to Farfetch was terminated in December 2023.
Dive Insight:
The luxury sector is up against significant headwinds in 2024, but at Richemont, jewelry sales saved the 2023 holiday season.
Jewelry and watch sales represent about 87% of Richemont’s total business, and jewelry brands Buccellati, Cartier and Van Cleef & Arpels brought in almost 4 billion in sales for Q3, representing a 6% uptick year over year. Although specialty watch sales from brands including A. Lange & Söhne, IWC, Jaeger-LeCoultre and Vacheron Constantin dropped 1% year over year to 939 million euro, the combined category sales offset a 4% decline in the company’s other business, which includes Fashion and Accessories Maisons Alaïa, Chloé, Delvaux, Dunhill and Peter Millar.
Jewellery Maisons and Specialist Watchmakers also contributed to 71% of Richemont’s Q3 retail sales, which grew 6% for the quarter. Meanwhile, wholesale remained flat and online sales shrank 9% year over year.
Sales in the Asia Pacific region grew to about 2 billion euros for the quarter, which the company attributed to a 25% sales from customers in China. Meanwhile, Japan sales grew to 514 million euros, which the company attributed in part to “growing domestic sales and strong tourist spending, notably from Chinese clients.” Middle East and Africa sales grew to 449 million euros, and the Americas increased to 1.4 billion euros, “driven by a resilient economy and lower purchases abroad by domestic clientele, notably in Europe,” said the company. Americas sales represent a notable rebound for the company, which posted a 4% drop in Q2 sales for the region.
In 2024, Richemont’s search for a YNAP buyer comes as the company’s e-commerce business struggles. Its Q3 online sales dip of 9% follows a Q2 online sales drop of 7%. In addition, the challenges its would-be partner Farfetch experienced leading up to the cancellation of its YNAP bid may represent larger implications for e-commerce and luxury, and add urgency to Richemont’s renewed search for a YNAP buyer.
Richemont’s earnings are set against the background of a wider luxury sector slowdown. Hugo Boss reported increased revenue on Monday, but missed analyst expectations; as a result, the company’s shares fell 11% on the day of the report, though they began a recovery as of press time. In addition, Burberry’s early profit warning last week means the fashion industry will be paying particular attention to LVMH earnings when the company reports on Jan. 25.
