Richemont’s latest results report on Friday was weaker than had been expected as the owner of Chloé, Dunhill and Alaïa faced affluent consumers becoming almost as cautious as those further down the price scale.
But the figures also clearly show that the company was impacted by currency fluctuations with a raft of positive currency-neutral figures translating into negatives at actual exchange rates.
The group, which also owns major watch and jewellery brands such as Cartier, Piaget and IWC, saw net profit of almost €1.51 billion in the half to the end of September. Analysts had expected it to be over €2 billion.
That came despite sales rising 6% to €10.22 billion which, again, was lower than analyst predictions.
Meanwhile, the second quarter saw currency-neutral sales rising a fairly tame 5%.
Chairman Johann Rupert talked of “a broad-based normalisation of market growth expectations across the industry”.
Digging deeper into the figures, the company said the six months saw operating profit from continuing operations falling 2% to €2.7 billion, “notwithstanding uncertain macroeconomic and geopolitical environments, demanding comparatives and significant adverse foreign currency movements”. The figure was actually up 15% currency-neutral.
The growth it did see was led by Asia Pacific, with sales up 14% at actual exchange rates (and 23% currency neutral), and Jewellery Maisons, with sales up 10% at actual exchange rates (or 16% currency neutral).
Meanwhile, Specialist Watchmakers sales fell 3% at actual exchange rates but rose by the same amount currency-neutral.
Its so-called ‘Other’ business — which includes all its fashion and accessories ops — saw sales falling 1%, although here too they rose 3% on a currency-neutral basis. The unit made a €6 million operating loss overall but the Fashion & Accessories Maisons generated a €25 million operating profit.
The company said sales at those Fashion & Accessories Maisons were “broadly in line with the prior-year period, with most Maisons posting higher sales”. And of particular note was the “retail performance and continued outperformance of Alaïa, Delvaux and Peter Millar, together with the success of Montblanc’s redesigned leather collections”.
The company is optimistic about its fashion business and that was clear this summer as it signed a deal to acquire control of shoemaker Gianvito Rossi. It said this will “strengthen our portfolio of Fashion & Accessories Maisons” and the transaction is expected to complete in the first half of calendar next year.
The chairman is cautiously upbeat for the next half, although he recognised that conditions can change quickly.
“The period under review started strongly, beyond our expectations,” he explained. “However, growth eased in the second quarter as inflationary pressure, slowing economic growth and geopolitical tensions began to affect customer sentiment, compounded by strong comparatives. Consequently, we have seen a broad-based normalisation of market growth expectations across the industry.
“The positive news is that a soft-landing scenario seems to be prevailing in major economies with still higher growth expected from China, which should benefit from stimulus measures.”
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