Group reports ongoing positive trade in five months to August 31.
Richemont Group announced results for the five months from April to August 31 at its annual general meeting, with sales increasing 35% at constant exchange rates.
On a region-by-region basis, sales growth in Europe was described as “robust” by the group, reflecting purchases made by local clients as well as travellers.
The Asia-Pacific region continues to report very strong sales growth for the group, which it says stems from sustained consumer confidence in the region – something widely reported by the luxury conglomerates and brands.
In Japan sales increased by 8% at constant exchange rates despite the earthquake and flooding which affected the country in March this year, which has no doubt had a ripple effect on luxury retail in the country.
Retail sales enjoyed a higher momentum than wholesale sales thanks to a good performance in Richemont’s retail boutiques – including A. Lange& Sohne, Van Cleef & Arpels, IWC and Baume & Mercier. Richemont reports that there has been rapid expansion of its retail networks, particularly in the Asia-Pacific region, and strong growth online at luxury shopping site Net-a-Porter.
In particular, Richemont noted that its jewellery and watch brands have enjoyed good sales, with a 41% increase in jewellery sales at constant exchange rates, and a 34% boost in watch sales.
The group expects its sales and operating profit for the first six months of this year to be significantly higher than the comparative period.
Based on the strengthening of the Swiss Franc between March 2011 and today, the group will incur a significant translation loss on its cash balances. Further, the accounting gain recognised in the comparative period relating to the acquisition of Net-a-Porter of €101 million (£87.4 million) will not re-occur.
Accordingly, Richemont expects attributable profit to be broadly in line with the prior year despite a significantly higher operating profit.
Johann Rupert, executive chairman and group chief executive officer, said: “The rest of the financial year is difficult to predict. The problems of fiscal deficits generally and Euro zone difficulties in particular are likely to act as a drag on business prospects for companies in the period ahead, especially if the growth markets are affected.
“To hope for a continuation of the current good trading levels in such circumstances may be over-optimistic. In addition, we must keep in mind the demanding comparative figures against which sales in the coming six months will be measured.
“Moreover, the impact of the Swiss franc’s appreciation against the euro and other major currencies obviously poses a challenge for all Swiss exporters. For Richemont, with a significant production base, our headquarters and many of our maisons located in Switzerland, the stronger Swiss franc will continue to be negative for our cost of sales and operating expenses, maintaining negative pressure on our margins,” Rupert added.
He said that he felt it “reassuring” that the group continues to enjoy a strong financial position. Its net cash position at 31 August 2011 was €2.6 billion (£2.25 billion).
“The strength of our balance sheet, our continuing cost discipline and the agility of our Maisons means that we will continue to maintain our investment plans and face the foreseeable future with cautious optimism,” said Rupert.
Richemont’s interim results for the six-month period to 30 September 2011 will be released on 11 November 2011.