Richemont shares shine despite loss
• Luxury goods retailer reports sterling sales, but €2.7bn writedown of online retailer YNAP hammers bottom line
Richemont shares soared to their highest level since February despite the luxury goods retailer reporting an interim loss after writing down the value of its lossmaking online retailer YOOX Net-a-Porter. The stock gained as much as 21% before ending Friday’s session 12.83% higher as investors focused on the group’s sales.
Richemont shares soared to the highest since February despite the luxury goods retailer reporting an interim loss after writing down the value of its lossmaking online retailer YOOX Net-a-Porter (YNAP).
The stock gained as much as 21% before ending Friday’s session 12.83% higher at R214.33 as investors focused on the group’s sales, which jumped almost a quarter in the six months ended September to €9.68bn (R172.8bn), boosted by strong growth in the Asia-Pacific region.
The owner of luxury brands such as Cartier, Montblanc, Dunhill, Chloe and Piaget said sales at its jewellery business rose 24%, while profit from continuing operations, which excludes the writedown and losses at YNAP, rose 40% to €2.1bn.
A breakdown of revenue by region shows Asia-Pacific accounted for 38.81%, followed by the Americas (22.77%), Europe (22.54%), Japan (8.34%), and the Middle East and Africa (7.54%) as customers flocked to the group’s boutiques after the lifting of Covid-19 restrictions.
But the bottom line was a €766m loss for the period compared with a €1.25bn profit a year earlier after the €2.7bn noncash writedown of YNAP.
BLUEBELL
Richemont’s investment in YNAP had come under strong criticism from European activist shareholder Bluebell, Business Day reported in August, after investing heavily in YNAP but losing hundreds of millions of euros over the years.
The Geneva-based group has since sold 47.5% of YNAP to Farfetch, and a further 3.2% to Middle Eastern partner Alabbar. Farfetch, a British-Portuguese online luxury retailer, has the right to buy the remainder of YNAP in three to five years if certain earnings targets are met.
Richemont chair Johann Rupert — who owns all the nonlisted category B shares, representing 9.1% of the capital but 50% of the voting rights — warned of uncertainty ahead, thanks to the risks posed by rising interest rates and cost of living pressures.
“It is highly uncertain how the political, economic and social landscapes will evolve in Europe and in our other key markets,” the billionaire said.
“We only know that we are likely to face volatile times ahead as central banks seek to rein in inflation, while governments try to manage the severe cost of living pressures.”
DISTRIBUTION CHANNELS
In terms of distribution channels, most sales occurred at retail outlets (66.61%), followed by wholesale and royalty income (27.11%) and the rest from online.
The biggest business segment remains the luxury Jewellery Maisons, which includes the Buccellati, Cartier and Van Cleef & Arpels brands that accounted for 65.56% of sales. Specialist watchmakers A Lange & Söhne, Baume & Mercier, IWC Schaffhausen, Jaeger-LeCoultre, Panerai, Piaget, Roger Dubuis and Vacheron Constantin comprised 21.11%, with the remainder — 13.32% — coming from other businesses, including fashion and accessories.
SWISS EXCHANGE
With a primary listing on the Swiss Exchange, the R1.119trillion company has a secondary listing on the JSE and counts Compagnie Financiere Rupert as its largest shareholder.
IT IS UNCERTAIN HOW THE POLITICAL, ECONOMIC AND SOCIAL LANDSCAPES WILL EVOLVE