- Prachi Singh |
Sales at Compagnie Financière Richemont SA, for the year ended March 31, 2019, increased by 27 percent to 13.99 billion euros (15.63 billion dollars) at actual and constant exchange rates. The company said, excluding YNAP and Watchfinder, sales for the year rose by 8 percent at constant exchange rates, with all regions showing growth with the exception of the Middle East and Africa. Asia Pacific and the Americas posted double digit sales increases driven by mainland China, Hong Kong, Korea and the US.
Profit for the year rose by 128 percent to 2.79 billion euros (3.12 billion dollars), reflecting a 1.38 billion euros (1.54 billion dollars) post-tax non-cash accounting gain on the revaluation of the YNAP shares held prior to the tender offer. Excluding this amount, profit for the period grew by 15 percent driven by a higher operating profit. Earnings per share increased by 128 percent to 4.927 euros on a diluted basis.
Financial highlights of Richemont’s full year
The company added that 8 percent growth at constant exchange rates in the group’s directly operated boutiques was driven by solid jewellery and watch sales and the 7 percent increase in wholesale sales reflected successful watch launches and favourable comparatives. Excluding the prior year’s 203 million euros watch inventory buy-backs from multi-brand retail partners, wholesale sales were moderately up on prior year at constant exchange rates.
Gross profit grew by 20 percent to 8,645 million euros (9,659 million dollars). The company said, consolidation of online distributors contributed to the increase in gross profit but diluted the group’s gross margin to 61.8 percent compared to 65.2 percent a year ago. Excluding online distributors, gross margin improved by 110 basis points to 66.3 percent.
Operating profit rose by 5 percent to 1,943 million euros (2,171 million dollars). Operating margin amounted to 13.9 percent compared to 16.7 percent a year ago. Excluding the consolidation of YNAP and Watchfinder, and one-time net charges, operating margin improved to 19.5 percent.
Richemont’s performance across core regions
The company’s sales in Europe grew by 37 percent, supported by the first-time consolidation of YNAP and Watchfinder which have a strong presence in Europe. The region accounted for 29 percent of group sales compared to 27 percent a year ago. Excluding online distributors, sales in the region increased by 1 percent. Sales, the company said, were in line with prior year in the United Kingdom; they progressed in Switzerland and, to a lesser extent, in France. Wholesale sales decreased while retail sales grew low-single digit driven by the jewellery maisons and by the specialist watchmakers.
Sales in Asia Pacific, which accounted for 38 percent of group sales, posted a 20 percent growth. Excluding online distributors, sales in the region were 14 percent higher, driven by double-digit growth in all main markets, including mainland China and Hong Kong. The retail channel, supported by 20 net new store openings, as well as the wholesale channel registered double digit growth, driven by strong performances at the jewellery maisons and specialist watchmakers.
Richemont added that sales in the Americas grew by 40 percent, benefiting from the inclusion of YNAP, which has a strong sales base in the US. The region’s contribution to group sales therefore increased to 18 percent, compared to 16 percent a year ago. Excluding online distributors, sales progressed by 11 percent. Sales in Japan were up 16 percent and excluding online distributors, sales increased by 8 percent. Japan accounted for 8 percent of group sales, compared to 9 percent in the prior year.
Sales in the Middle East and Africa increased by 8 percent. Excluding online distributors, sales in the region decreased by 2 percent, as the wholesale distribution network was further optimised and currency movements continued to be relatively unfavourable. Middle East and Africa represented 7 percent of group sales, compared to 8 percent a year ago.
Richemont witnesses growth across retail channels
The 8 percent retail sales growth, the company said, was driven by double digit increases at jewellery maisons and specialist watchmakers, despite temporary store closures in France and the group’s divestment of Lancel. Retail sales benefited from the reopening of a number of renovated stores, the full year impact of the internalisation of external points of sales in the Middle East in late calendar year 2017 and the first-time consolidation of Watchfinder stores. All regions experienced growth, with double digit increases in Asia Pacific and the Americas.
The group’s wholesale business, which includes sales to franchise partners and multi-brand retail partners, posted a 7 percent sales increase. The performance was contrasted between regions, with Asia Pacific and Japan registering double digit increases, while Europe and the Middle East and Africa registered lower sales.
Picture:Richemont media assets