Richemont grows more slowly in a difficult environment
Published: Friday, Nov 10th 2023, 13:21
Updated At: Saturday, Nov 11th 2023, 00:54
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The jewelry and watch group Richemont continued to grow in the first half of the 2023/24 financial year. However, the Group has recently lost momentum due to the weakening global economy, geopolitical tensions, the weak dollar and high inflation. The watch business has suffered as a result. However, the Group remains confident overall.
Group sales rose by 6.0 percent to 10.2 billion euros (approx. 9.83 billion Swiss francs) in the period from April to September, as the manufacturer of luxury watches under the Piaget and IWC brands and fine jewelry from Cartier and Van Cleef & Arpels announced on Friday. Calculated in local currencies, the increase amounted to 12 percent. This is less than a year ago (+16 percent).
The operating result (EBIT) from continuing operations amounted to 2.7 billion euros. On a comparable basis, this is a decrease of 2.0 percent.
The bottom line was 2.2 billion euros - an increase of 3.0% compared to the same period last year. Including discontinued operations, this results in a net profit of 1.5 billion euros. The difference is primarily due to a further write-down of 500 million euros in the online business for the Yoox-Net-A-Porter platform.
Weaker watch business and strong jewelry business
The Geneva-based group recorded a 2.7 percent drop in watch sales to just under 2.0 billion. The "Other" division also recorded a drop of 1 percent to 1.3 billion euros. This includes fashion, leather goods and stationery.
In contrast, the jewelry business once again outshone the other areas. Sales rose by almost ten percent to 6.9 billion. The retail trade was once again by far the strongest sales channel.
The Group also recorded growth in local currencies in all regions. Growth was strongest in Asia-Pacific, the largest region with a 42% share of sales (+23%), where sales increased in jewelry stores and retail following the end of the coronavirus restrictions in China.
In Europe, the second-largest region, sales increased by 5 percent, while they almost stagnated in America. Richemont attributed the weak growth in the Americas region to lower wholesale sales and the weak dollar.
Growth was stronger in Japan (+13%) and in the Middle East & Africa region (+9%). Japan benefited from the return of tourism, especially from mainland Chinese, as a result of the weak yen.
Still optimistic
As usual, Richemont did not provide a concrete outlook for the future. However, Richemont is hoping for a soft landing of the economy in the USA and Europe. Higher growth is also expected in China due to the economic measures.
Chairman of the Board of Directors Johann Rupert said in a telephone conference that customers in large markets such as China and the USA were cautious. However, Chinese tourists have been traveling more since the opening, especially in Southeast Asia. "And people traveling appreciate fine things," the President emphasized. "We are positive in the medium term."
The figures were not well received on the stock market. The share price slumped by 7.4 percent. Richemont missed market expectations in terms of sales and operating profit.
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