Richemont has a A semi-annual statement does not meet the expectations of analysts and investors. Although the luxury goods company can significantly increase its sales and profits from April to September. However, this was mainly due to the acquisition of the online retailer Yoox Net-a-Porter, which strengthened Internet business, as well as buying a British Reserve watch platform. Both discussions swell and the result.
Richemont produced a net profit of € 2.25 billion in the first half of the year, after just under € 1 billion in the same period of the previous year. Earnings were boosted through pricing earnings on Yoox shares of € 1.38 billion. In the meantime, sales increased by 21% to € 6.8 billion. With the exception of both discussions, growth rose by 6%. Operating profit dropped by 3% to € 1.13 billion. As part of purchases and sales in the reporting period, a € 159 million load was removed, the company said. In June, the company generated a company with a Lancel leather brand, which has lost money for years.
Margins and stocks under pressure
On Friday, Richemont shares dropped by 6%. Among other things, analysts referred to the company's lower profitability. The EBIT edge dropped from 20.7% to 16.6%. Here too, the influence of online sellers, which performs lower edges than watch brands such as Vacheron Constantin, Roger Dubuis or Jaeger-LeCoultre, and especially as the Cartier and Van Cleef & Arpels jewelry brands. In general, the Richemont online sales account is for 14% of revenue, thanks to Yoox Net-a-Porter and Reserve. In the core business, that is in the viewing and jewelery sector, however, the online proportion is much lower.
The disappointment was also caused by a weak business September. As Chief Financial Officer Burkhart Grund said, at a telephone media conference, there were special effects such as the tropical hurricanes in Hong Kong, and had a negative impact on regional tourism. In October, the company grew again at a similar rate to the average half of the year.
The watch business continues to bite at Richemont. A viewing sales rose by 2% moderate, while operating profits slipped by 3%. Here, in detail, there were detailed supplies and orders that had been blocked in wholesale trade and warehouse commissions in connection with the repurchase of viewing. Through a careful delivery policy and backup purchases, the Group seeks to reduce the high stock levels in retailers to prevent surplus stations from appearing on the gray market. On the other hand, sales in his own boutiques grew strong.
Worried about trade conflicts
In Richemont, the jewelery business is very acceptable, with an impressive edge of 33.8%. From a regional perspective, Hong Kong, Korea and the US reported increasing sales. In turn, sales developed weak (+ 2%, excluding online trading). In Asia, however, double-digit sales increased in boutiques and retailers. Business in China also continues to develop well, despite growing concerns about the US trade dispute, Reason explained. According to the CFO, what is important to the luxury goods industry is the effect of trade dispute at exchange rates. Chinese tourists responded extremely sensitively to changes in exchange rates. About two thirds of luxury goods purchases travel to the Chinese.