Richemont’s profit declines despite rise in sales

Worldwide
Published:  11 November, 2019
Credit: Montblanc

The Switzerland based luxury conglomerate has posted a 9% sales increase at actual exchange rates to €7,397 million for the six months ended September 30, 2019, up 6% at constant exchange rates.

Richemont’s operating profit increased €35 million (+3%) to €1,165 million, reflecting higher sales and gross profit, partly offset by controlled increases in costs, while operation margin was 15.7% in the period compared with 16.6% a year ago. Excluding Online Distributors, operating margin was 21.8 percent. Net profit declined 61% in the period to €869 million euros, while earnings per share fell 62% to €1.53. “Distributors posted double-digit sales growth; however, operating losses increased as we invested to strengthen their market position and technology leadership”, said Johann Rupert, Chairman, Richemont. “We are undertaking a significant transformation to ensure our Maisons and businesses will continue to prosper in a more connected world. Our ambition is to craft an ethical, inclusive, sustainable and profitable future. These objectives require time, investment and flawless execution; and we must remain vigilant amid global uncertainties”, he added.

At actual exchange rates, Richemont said sales were higher across all regions, distribution channels and business areas, with double digit progression in Japan (+13%), and high-single digit growth in Europe (+7%), the Americas (+6%) and Asia Pacific (+5%). China, Korea, Japan, the U.S. and the UK are said to have significantly outperformed other locations.

The Specialist Watchmakers’ sales were 1% higher than in the prior year period while sales in the ‘Other’ category, which includes the Fashion and Accessories Maisons and the Group’s watch component manufacturing, also increased 1%, supported by “the strong performance” of Peter Millar, with other Maisons posting softer performance. “Of note, sales of leather goods at Montblanc and Chloé also grew”, said Richemont.

Credit: Chloé