Richemont continues to grow even in a difficult environment
Published: Friday, Nov 10th 2023, 08:20
Updated At: Saturday, Nov 11th 2023, 00:54
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Luxury goods are in demand even in a difficult environment. Despite geopolitical tensions, economic uncertainties and unfavorable currency developments, the jewelry and watch group Richemont continued to increase sales in the first half of 2023/24 (as at 30 September) and generated a billion-euro profit. However, growth weakened in the second quarter. Overall, the jewelry business was again very strong with an increase of ten percent.
Group sales rose by 6.0 percent to 10.2 billion euros (approx. CHF 9.83 billion) in the period from April to September, as the manufacturer of luxury watches under the Piaget and IWC brands and expensive jewelry from Cartier and Van Cleef & Arpels announced on Friday. Calculated in local currencies, the increase amounted to 12 percent.
Jewelry sales rose by almost ten percent to 6.9 billion. In contrast, the Geneva-based group recorded a 2.7 percent decline in watch sales to just under 2.0 billion. According to the press release, the Group's "Other" division recorded a decline in sales of 1 percent to 1.3 billion euros.
The operating result (EBIT) from continuing operations amounted to 2.7 billion euros. On a comparable basis, this is a decrease of 2.0%. The bottom line was 2.2 billion euros - an increase of 3.0% compared to the same period last year.
Strong growth in Asia
The Group recorded year-on-year growth in local currencies in almost all sales channels and regions. Growth was strongest in the largest region, Asia-Pacific (+23%), where sales increased in the jewelry stores (Buccellati, Cartier and Van Cleef & Arpels) and in the retail channel following the reopening in China after the coronavirus pandemic.
This was followed by Japan (+13%), the Middle East & Africa region (+9%), Europe (+5%) and the Americas (+1%). Richemont attributes the weak growth in the Americas region to lower wholesale sales and the "relatively weak dollar". Japan benefited from the return of tourism, especially from mainland Chinese, as a result of the weak yen.
Slowdown in the second quarter
As usual, Richemont did not provide a concrete outlook for the rest of the 2023/24 financial year. However, Chairman of the Board of Directors Johann Rupert pointed out in the press release that the first half of the year had started strongly and that growth had then weakened in the second quarter under the influence of inflationary pressure, the slowdown in economic growth and geopolitical tensions. This had affected customer sentiment.
In addition, the comparative figures were very strong. As a result, "market growth expectations have normalized across the board in the entire sector". On a positive note, a soft landing appears to be taking place in the major economies. Higher growth is expected in China due to the economic measures.
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