Richemont’s third-quarter revenue up 7%
SWISS luxury group Richemont yesterday reported that its revenue increased 7 percent, excluding currency shifts, in the quarter to the end of December, beating market expectations of growth of 5.9 percent.
Richemont owns international luxury brands such as A Lange & Söhne, Baume & Mercier, Cartier, Chloé, Dunhill, IWC Schaffhausen and Van Cleef & Arpels.
However, the group reported lower wholesale revenue, as it became more selective with its retail points, a sign that the luxury-brands house is cleaning up its distribution network after being forced to buy back unsold watches. Wholesale revenue was down 3 percent to €1.14 billion (R16.92bn), but this was offset by a 13 percent increase in retail revenue, to €1.98bn, in the quarter.
“Wholesale sales decreased 3 percent, reflecting qualitative upgrades to our external distribution network and the monitoring of inventory at our multibrand retail partners. Growth in Asia-Pacific in the wholesale channel was offset by declines in other regions,” the group said.
Richemont said Asia-Pacific and the Middle East and Africa were its two best-performing regions, reporting sales growth of 11 percent during the quarter.
The group said the growth in these regions benefited from favourable currencies, the internalisation of external points of sales and the anticipated introduction of value-added tax in the United Arab Emirates.
However, in actual rates, the regions achieved sales growth of only 5 percent and 3 percent respectively.
The Americas recorded sales growth of 8 percent at constant exchange rates. The group attributed this to a good performance from the Jewellery Maisons. In Japan, it recorded sales growth of 5 p ercent, supported by strong growth from specialist watchmakers and a favourable currency environment, the group stated. Sales in Europe were disappointing because of the strength of the euro, and challenging comparatives in the UK weighed on sales, which declined 1 percent.
Richemont said its other businesses posted stable sales, with growth notably from Montblanc, Chloé and Lancel.
“Excluding the impact of the sale of Shanghai Tang, the other businesses would have recorded moderate growth,” the group said. The group’s net cash position at the end of December 2017 was €5.1bn, down from €5.2bn at the end of 2016.
It achieved sales growth of 10 percent at constant exchange rates, boosted by the continuation of the positive trend seen in the first six months of the financial year. At actual rates, the group said it achieved sales growth of 7 percent.
In its annual results to the end of March 2017, the group reported sales of €10.65bn, operating profit of €1.76bn and profit of €1.21bn.
Richemont’s shares closed 0.04 percent lower at R114.55 on the JSE yesterday.