Dive Brief:
- Compagnie Financière Richemont SA H1 sales rose to 10.2 billion euros, or approximately $10.9 billion at current exchange rates, showing a 6% increase from last year’s 9.7 billion euros, the company reported Friday.
- Sales in Asia Pacific were up 14%, led by a 23% sales boost in China, and the company said the overall region was its strongest for the period. Europe rose 3%, Japan was up 2%, and the Middle East and Africa rose 5%. Meanwhile, the Americas dropped 4%, which the company attributed to “lower wholesale sales and a relatively weak US dollar over the period.”
- Retail sales rose 9% to 7.01 billion euros, while wholesale and royalty income grew 1%, with growth for the company’s jewelry divisions offset by declining watch sales. Online sales dropped 7%, and the company’s YNAP sales have been reclassified as discontinued operations.
Dive Insight:
Richemont numbers reflect the luxury slowdown felt by its biggest rivals, luxury houses LVMH and Kering, both of whom posted soft earnings for the current period.
Sales were still up for the company which owns fashion, accessory, jewelry and watch brands including Chloé, Alaïa, Cartier and Piaget. However, the single-digit increase represents a significant change from last year, when Richemont posted 24% growth for H1 and a 30% increase in its retail sales channel.
“The period under review started strongly, beyond our expectations,” Johann Rupert, charmain, said in the release. “However, growth eased in the second quarter as inflationary pressure, slowing economic growth and geopolitical tensions began to affect customer sentiment, compounded by strong comparatives. Consequently, we have seen a broad-based normalisation of market growth expectations across the industry.”
Rupert said the company expected even higher growth from China moving forward, thanks to stimulus measures in the region, and added that he had “every confidence in the long-term prospects of our Group.”
Last month, the European Commission gave antitrust clearance on a deal between Richemont and U.K.-based luxury retailer Farfetch regarding the latter's acquisition of digital luxury retail platform YOOX Net-a-Porter, which consists of Net-a-Porter, Mr Porter, The Outnet and Yoox. According to the terms of the arrangement, Farfetch will receive a 47.5% stake in the YNAP in exchange for shares in Richemont. The deal also involves Mohamed Alabbar’s Symphony Global, which became a partner in YNAP in 2016. Through the new agreement, Symphony will acquire a 3.2% stake in YNAP, which Richemont’s release stated will make the e-commerce company “a neutral online platform for the luxury industry.”
YNAP’s performance, which was reclassified under ‘discontinued operations’ saw sales decline by 13% for H1.
Richmont previously reported a 3.4 billion euro non-cash charge on the transfer of YNAP net assets “to ‘held for sale’ at 31 March 2023” in an annual earnings statement released in May.
