Overall group sales up 4% in H1; boutiques aid jewellery sales.
By Kate Doherty
Richemont Group has announced its unaudited consolidated results for the six month period ended 30 September 2013, with jewellery sales from brands Cartier, Van Cleef & Arpels and Piaget generating €2.61 billion (£2.2bn), up 2% compared to H1 2012.
The luxury goods group’s overall sales climbed 4% in H1, compared to same period in 2012, totalling €5.32 billion (£4.45bn).
A statement regarding the results said Richemont jewellery sales had grown in "a subdued environment", with Cartier and Van Cleef & Arpels’ boutique networks reporting good growth, with particularly strong demand for jewellery.
Demand for Cartier’s watch collections was broadly in line with the prior year at constant exchange rates, and the operating margin improved slightly against the prior period.
Richemont watch sales were up by 9% for the six month period, generating €1.59 billion (£1.3bn), compared to €1.46 billion (£1.21bn) for the same period in 2012.
The operating margin for watches decreased slightly against the comparative period, while losses at the group’s watch component manufacturing facilities were described as lower than the comparative period.
Its watch brands include IWC, Jaeger-LeCoultre, Piaget and Panerai. According to Richemont the increase in sales was said to reflect, in particular, international demand for jewellery and haute horlogerie from the specialist watchmakers.
Total group operating profit decreased by 1% to €1.4 billion (£1.16bn), which was said to reflect unfavourable currency movements. Although there was an increase in gross profit by 3%, this was reportedly offset by controlled increases in operating expenses. Selling and distribution expenses were 5% higher overall, in line with the increase in sales through the brands’ own boutique networks. The main increases within operating expenses were linked to depreciation charges and fixed rental costs, while personnel costs increased slightly. Profit for the period rose by 10% to €1.2 billion (£1bn), reflecting currency hedging gains.
Meanwhile, specifically for the month of October, overall sales had climbed. In a statement, chairman Yves-André Istel said that October sales at the Richemont Group increased by 6% at actual exchange rates and 12% at constant exchange rates. The luxury goods group announced that it does not intend to sell any of its businesses.
Media sources had previously speculated about plans from Richemont to offload a number of its fashion brands, a notion triggered by some comments from former chairman Johann Rupert, who is currently on a sabbatical. In this latest statement, Istel quashed the reports, stating: "Further investment in the maisons will be made, as in the past, to assure their long-term prosperity. No disposals are under consideration at this time or for the foreseeable future. The company will not comment further on this subject."
The sales growth in October was largely credited to sales in the Asia Pacific region, with sales primarily due to positive retail developments and exceptional high jewellery sales. Meanwhile, sales from own-brand shops were said to perform better than those of other outlets. "In all regions, retail sales were strong, outperforming the wholesale channel where re-order levels remain cautious," said Istel.
Retail sales, comprising directly operated boutiques and Net-a-Porter, increased by 5% and continued to outperform wholesale sales, reflecting a good performance in Richemont brands’ existing boutiques as well as the opening of new ones, primarily in Europe, the Middle-East and the Asia Pacific regions. It was said that 52% of group sales were generated through its own retail network, which increased to 1, 043 boutiques at the end of September. The Group’s wholesale business, including sales to franchise partners, reported satisfactory growth.
In terms of regions, growth for the six months was said to be satisfactory across segments, regions and channels and Europe accounted for 38% of overall sales, with European and Middle-Eastern sales continuing to benefit from visitors in major tourist destinations. Sales in the Asia Pacific region accounted for 40% of the group total, with Hong Kong and mainland China the two largest markets. Asia Pacific was led by good growth in Hong Kong and Macau, offset by lower sales in mainland China, which is said to largely reflect "prudent consumer sentiment after several years of exceptional expansion".
Istel went on to say that, for the second half of the year, current exchange rates are likely to weigh on the groups’ reported results and while the comparative sales figures for the important Christmas trading period are less challenging, the "subdued overall environment and in particular our continued investments for the long term call for increased caution".
The Richemont 2013 Interim Report will be published on November 14, 2013.