The Company Held Relatively Steady Despite the Difficulties Facing the Luxury Sector
Despite choppy waters in the luxury sector, Richemont, the parent company of Cartier, Chloé, Alaïa, and more, reported moderate stability in the first fiscal half of the year. Nevertheless, sales dipped 1 percent, totaling 10.1 billion euros and profit fell to 457 million euros, mainly attributed to the sale of Yoox Net-a-porter to Mytheresa.
A majority of the decreases stemmed from waning demand in the Asia-Pacific region, where sales plummeted 19 percent, mostly driven by China. In contrast, the Americas and Japan experienced growth, as sales rose by 10 percent and 32 percent respectively over the six-month period.
Broken down by category, jewelry, being Richemont’s top-selling product range, saw a 2 percent increase while specialist watches experienced a 17 percent decrease, primarily due to the economic slowdown in China. Richemont pointed this out as a sign of the urgency for self-restraint and vigilance against overproduction, highlighting the importance of acclimatizing to the changing market circumstances in maintaining product appeal.
The company’s “other” category, encapsulating the fashion and accessories maisons, posted a 4 percent growth, while fashion and accessories individually saw a 2 percent uptick, spearheaded by the performance of the Alaïa and Peter Millar brands.
Despite the slight growth, the other business divisions recorded a 52 million euros operating loss, from which the Fashion and Accessories department accounted for 23 million euros. Overall, operating profit fell 17 percent to 2.21 billion euros with continuing operations’ profit reducing to 1.73 billion euros from 2.16 million euros in the half-year period.
Johann Rupert, chairman of Richemont, remarked on the company’s enduring resilience despite uncertainty becoming an unwelcome staple of the modern world. He acknowledged strong sales across most regions canceling out a significant weakness in Chinese demand. However, he added, “This weakness, as I had predicted, will take longer to recover and is particularly affecting our specialist watchmakers.”
Rupert carved out a mission, stating, “What we are seeing in the world today is not unprecedented. It illustrates just how important it is to have strong leadership with a long-term vision, to continue to invest in our maisons’ excellence in crafting and marketing distinctive and timeless creations, to manage our offer with discipline, and to have an agile structure and a solid balance sheet.”
Despite the uncertainties, Rupert expressed his confidence in the company’s capacity to sail through the current and future cycles. He added assurance, “I am confident in our ability to deliver sustained value over the long term for all stakeholders.”