Total Europe sales up 11%, with jewels offsetting weak fashion brands.
Luxury goods group Richemont has announced its annual audited consolidated results for the year ended March 31 2014, with jewellery sales growing 4% to a total €5.43 billion (£4.43bn).
The group, which owns a number of jewellery brands including Van Cleef & Arpels, Cartier, Piaget and Montblanc, reported full-year jewellery sales of €5.43 billion (£4.43bn), with its jewellery operating results also up 4% to €1.89 billion (£1.54bn).
Of its jewellery houses, Richemont stated that Cartier and Van Cleef & Arpels had performed well, with both houses’ sales up 4% in "a subdued environment".
Its jewellery boutique network reported good growth and is said to have benefitted from further global openings. A statement from the full-year results said: "Demand for jewellery was particularly strong; demand for Cartier’s watch collections was moderate, tempered by lower wholesale orders".
Richemont’s overall sales grew 5% in the full-year to March 31 2014, hitting €10.65 billion (£8.68bn), or 10% at constant exchange rates. Gross profit totalled €6.75 billion (£5.5bn), up 4%.
Its operating profit was said to be in line with the prior year at €2.42 billion (£1.97bn), while operating margin was down to 22.7%, primarily reflecting unfavourable exchange rate effects.
Richemont’s profit for the year climbed 3% to €2.06 billion (£1.68bn), including currency hedging gains.
Richemont chairman Yves-André Istel described the results as "satisfactory", with figures supported by improvements in Asia Pacific, the Americas and Japan.
Istel said: "Strength in the jewellery and specialist watch segments offset the softness of certain fashion maisons and Montblanc. As a result, and taking into account the substantial currency headwinds which weighed on the group’s overall performance, operating profit was in line with the prior year. It includes provisions related to the reorganisation of Montblanc, but excludes any hedging gains or losses which are reported ‘below’ the operating profit line of the income statement.
"Net profit increased by 3%, including a €214 million positive effect of the exchange rate hedging activities.
The increase in cash flow from operations reflects not only the significant benefits of the exchange rate hedging programme, but also the maisons’ tight working capital management. It allowed the group to maintain its investment programme while strengthening its financial position: the group’s net cash position at March 31 2014 was up by €1.4 billion to € 4.7 billion."
The 5% increase in sales at actual exchange rates and 10% at constant exchange rates is said to have particularly reflected growth in the group’s own retail network, as well as improvements in domestic demand in Europe, North America, Japan and sustained tourism worldwide. Demand for jewellery and haute horlogerie timepieces was said to be "robust".
Richemont’s European sales totalled €391 million (£319m) for the year, up 11% at constant exchange rates. Europe accounted for 37% of overall sales during the year. Sales in the region moderated to a high single-digit rate, with the highest rates of growth through its maisons’ own boutiques located in tourist destinations, including Geneva, Paris, London and cities in the Middle East. Richemont’s brands also noted improvement in domestic purchases, with the Middle East and Africa reporting strong double-digit growth.
Richemont’s overall retail sales, comprising of directly-operated boutiques and Net-a-Porter, increased by 8% in the year ended March 31, with retail sales continuing to exceed the growth in wholesale sales, generating 55% of the group’s during the year.
The growth in retail sales partly reflected the addition of 42 internal boutiques to the maisons’ network, which reached 1,056 stores, and the performance of Net-a-Porter’s e-commerce businesses. The openings during the year were primarily in high-growth markets and tourist destinations.
In terms of wholesale, Richemont’s wholesale business, including sales to franchise partners, reported moderate growth. The year’s performance reflected the caution of wholesale partners in general.
Looking ahead, for the month of April 2014, sales increased by 1% at actual exchange rates, and by 6% at constant exchange rates.
At actual rates, all regions reported sales growth except for Japan, where the sales tax increase became effective on April 1. The retail channel continued to outperform wholesale in all regions except Japan.
Richemont said that it remains "focused on long-term organic growth and value creation for its clients, shareholders and employees", and intends to achieve this objective by offering desirable high quality products and by enhancing its production, product development and distribution.
The company also said it will continue to invest in talent, creativity and innovation, with a particular emphasis on markets with promising growth potential.