Richemont posts $9.88 billion in first-half revenue as competition intensifies

Richemont revenue increased 24% at actual exchange rate (and 16% at constant exchange rate) to €9.7 billion ($9.88 billion) for the first six months of the financial year, while operating profit increased by 26% to 2.7 billion. euros. In an S1 report On Friday, the Swiss luxury goods group said revenue was driven by “strong” demand for jewelry from Cartier and Van Cleef & Arpels, with sales in the jewelry division up 24% for the first half (se ending September 30) and watch sales. up 22 percent. “This indicates that mega-brands at the top of their categories continue to extend their lead over their competitors,” Bernstein analysts said in a note on Friday.

Regional distribution: Compared to the first half of 2021, Richemont revealed that it recorded double-digit sales growth “in all business areas, channels and regions, with the exception of Asia-Pacific, where sales increased by 3%” due to “temporary store closures in mainland China and Macau due to the continued implementation of the zero-Covid policy. The European market generated a 45% year-over-year revenue increase for Richemont , “fueled by strong local demand and the recovery of inbound tourism from the United States and the Middle East following the easing of most restrictions on international travel.”

In North America, reported sales rose 22%, “continuing trends seen in the first fiscal quarter, despite many Americans buying overseas.” Growth momentum in the United States has been highest for the watch division, according to Richemont. As for Japan, which posted the “strongest regional sales growth rate” of 76%, sales were achieved thanks to “strong domestic demand, a nascent return of tourists and weaker comparisons due to the closures shops during the period of the previous year”. And finally, in the Middle East and Africa, sales increased by 12% thanks to “solid domestic and tourism spending, particularly in Dubai”.

According to Bernstein’s memo, Richemont “sees strong underlying consumer demand, initially from Chinese nationals and more recently from customers in the United States, Europe and Asian countries outside of China, in all age groups”, with the younger consumer cohort proving to be particularly strong, “due in part to marketing efforts in recent years”.

In terms of distribution between physical retail and online: Richemont revealed that the retail channel grew in all regions, “most notably in the Americas, Europe and Japan”, reaching a 21% increase, while online sales increased by 9% year-over-year “as Group Houses continued to expand their digital presence.” The strongest growth during the period came from specialist watchmakers where online retail sales reached 3% of sales.” Overall, online retail sales contributed 6% to sales of the group, which is broadly in line with the period of the previous year,” the group said.

Richemont noted that “following the reclassification of YNAP sales as discontinued operations, ‘Online Retail’ now includes online retail sales directly generated by the Group’s Maisons and Watchfinder.”

As for the individual divisions of the group: Its three Jewelry Maisons – Buccellati, Cartier and Van Cleef & Arpels – generated a combined 24% increase in year-on-year sales to a total of 6.34 billion euros, with good performances for “all product categories”. “Iconic jewelry collections, such as Clash and Trinity (Cartier), Alhambra and Fauna (Van Cleef & Arpels) and Opera Tulle and Macri (Buccellati), to name a few, continued to outperform.”

Richemont management said on a Friday call with analysts that it sees “untapped opportunities in the branded jewelry segment alongside strong pricing power.” At the same time, however, they also see “increased competition in hard luxury” – presumably from LVMH with its fledgling redesign of Tiffany & Co.for example – “and is ready to continue to invest, if necessary, to maintain a leading position.”

The “Specialized Watchmakers” division generated €2.04 billion (up 22%), with performance driven here by “strong direct-to-customer sales: retail and online sales continued to grow strongly and , together, contributed 54% of specialized sales. Watch sales.

Richemont turnover by group

Lastly, the “Other” division – which includes the Fashion & Accessories Houses, Watchfinder, the Group’s watch component manufacturing and Real Estate activities – generated 1.29 billion euros in sales. “Nearly all the Houses recorded strong growth, with Delvaux and Peter Millar being particularly noteworthy,” according to Richemont. Alaïa’s sales also “grew strongly, benefiting from a renewed creative vision”.

Dive into the headline-grabbing YNAP deal, Richemont Chairman Johan Rupert said Friday that the agreement for Farfetch and Alabbar to acquire 47.5% and 3.2% of YNAP, respectively, which leaves Richemont with 49.3%, “will achieve my long-standing goal of making YNAP a neutral industry-wide player.” platform, with no controlling shareholder. Richemont will receive Farfetch shares, “expected to represent 12-13% of Farfetch’s issued share capital, to further align interests,” he said, noting that “subject to a number of conditions, including the obtaining certain antitrust approvals, the initial phase of the transaction is expected to be completed before the end of calendar year 2023.” At that time, he says the Houses of Richemont will “adopt Farfetch’s technology to create the best ‘road to market’ and realize their vision of ‘Luxury New Retail'”.

Sallie R. Loera