Richemont’s stop-start online quest
A cracker quarterly sales update has helped reinflate Richemont’s share price, but questions about its obstacle-strewn online plans abound
● There’s arguably no better time for luxury brands conglomerate Richemont to take a big step back on its prolonged quest to spin out its online retailing interests.
Given that arrangements with online retailing giant Farfetch came apart at the seams in a costly fashion late last year, Richemont might have expected to face a barrage of hostile analysts at its next quarterly results presentation.
But after it reported boisterous third-quarter sales up about 8% at constant exchange rates to €5.6bn, its best quarterly number yet analysts were far more interested in dissecting the prospects for regional and sales channel performances than harping on about hitches in the online strategy.
In truth, it does seem pedantic to fixate on the online setbacks when Richemont has just reported a 13% increase in Asia-Pacific sales driven by an outstanding 25% sales surge in mainland China, Hong Kong and Macau combined. There was also an 18% sales jump in Japan thanks to stronger tourist spending mainly from Chinese clients and the US was remarkably robust too.
The update helped immediately reinflate a sagging share price: Richemont shares jumped 10% on the day of the results, taking the stock back to R2,614 by the time of publication.
But while the core business especially the high-margin jewellery maisons continues to glitter, there’s little doubt Richemont’s “luxury new retail vision” has become blurry. Online retailing was meant to be a big deal expectations were that digital sales would account for a meaningful chunk of total sales.
But at last count, for the six months to end-September 2023, online sales excluding held-for-sale Yoox Net-a-Porter (YNAP)
comprised just €566m of the total €10.2bn in group sales. This was 2% down on the previous interim period.
This won’t mute lingering questions as to whether top-end