Richemont reports a 4% rise in annual sales due to increased jewelry demand, despite a drop in operating profit. Operating profit fell by 7% to 4.47 billion euros, impacted by watch sales softness in Asia. The company’s chairman remains optimistic about future growth prospects.
At the end of a tough year for the luxury sector, Richemont has reported a 4% increase in sales, reaching 21.4 billion euros. This boost was largely driven by a significant jump in jewelry sales during the fourth quarter, which saw double-digit growth across most regions, though the Asia Pacific lagged behind.
The owner of renowned brands like Cartier and IWC has seen its operating profit decline by 7% to 4.47 billion euros, affected by a slow demand for watches, especially in China. This decline particularly impacted the specialist watch brands within the company. Profits from ongoing operations dipped 1% to 3.76 billion euros, further complicated by a hefty loss of 1.01 billion euros from discontinued operations related to the sale of Yoox Net-a-Porter.
Jewelry sales specifically have been a bright spot, rising 8% over the year and jumping to double digits in the final quarter. This sales surge helped Richemont achieve an 8% overall growth for the last three months of the year. Chairman Johann Rupert expressed optimism about the year, describing the performance as robust despite various challenges.
Rupert emphasised the company’s continued commitment to growth in a difficult trading environment, stating they are focused on enhancing their distribution networks and manufacturing capabilities for quality craftsmanship. He noted a notable performance improvement, with a 10% rise in the third quarter, followed by an 8% increase in the last quarter.
While sales from specialist watchmakers have suffered, Rupert reassured that the overall group performance was strong, thanks to notable gains in jewelry and retail sectors. Additionally, Richemont’s “other” division, which includes fashion brands and watch components, experienced a 7% sales increase, reaching 2.79 billion euros.
Rupert highlighted that brands like Alaïa and Peter Millar contributed to strong growth. Ready-to-wear segments also performed well, particularly with a positive showing from Chloé. He warned that economic uncertainties could pose challenges ahead, insisting on the need for agility and discipline.
Looking forward, Rupert remained confident, pointing out that Richemont’s long-term approach and robust balance sheet have supported a seven-fold sales increase over the past 25 years, which aligns with their strategy moving forward.
In summary, Richemont has managed to achieve a 4% increase in sales, bolstered by a strong performance in jewelry, despite facing significant challenges in the luxury market, particularly with watches in Asia. The company’s focus on growth, investment in manufacturing and distribution, along with a healthy balance sheet, positions it well for future hurdles. Chairman Johann Rupert’s optimistic outlook reflects confidence in the brand’s resilience and adaptability in uncertain times.
Original Source: wwd.com