Richemont FY numbers - watch division hurting


Richemont just reported its results for the financial year ended 31 March 2018. It managed sales of EUR 10 979 million (up by 3% at actual exchange rates) and profit for the year of EUR 1 221 million (up 1%). Double digit sales growth was maintained in mainland China, Hong Kong, Korea and Macau.


Richemont 6M - back to growth


On Friday morning Richemont announced its unaudited consolidated results for the six month period ended 30 September 2017, showing what we mostly already knew thanks to numbers from their competitors. After having a tough couple of years, mostly due to the corruption crack down in China, they are back on the growth path. This was highlighted by a resurgent Hong Kong.


Richemont FY numbers - sales down


Richemont, the luxury goods producer, released results for their full year last Friday. Sales had fallen as a result of a tricky operating environment. Asia Pacific was flat, it still constitutes 37 percent of the overall business by sales, Europe is 29 percent, having fallen recently, much of that due to the recovery of the Americas (which is now 17 percent of all sales). There were pockets of strength, Mainland China, Korea and the UK, as well as the US.


Richemont 3Q trading update - sales growth


Richemont produced a 3rd quarter trading update for the period to end 31 December yesterday, just before the market opened. Jewellery sales across their platforms were stronger. Asia Pacific showing good growth, thanks mostly to South Korea and Mainland China, Macau and Hong Kong still a little in the dumpsters, the release suggests continued declines. I suspect a slight change in shopping patterns, mainland customers will become bigger consumers, even with the higher duties. In China it is called "consumption tax", see Import-Export Taxes and Duties in China. As far as my "research" on Hong Kong, the rate is zero for imported jewellery, it is by extension far cheaper to buy luxury items in Hong Kong than on the mainland.


Richemont 6 month numbers - drop in sales, management changes


Richemont stock soared 8 percent on Friday, the last three years however has seen the stock slip nearly 9 percent, notwithstanding the excellent day Friday. There were six month results and at face value they hardly looked like anything to get excited about. Perhaps they were less bad, perhaps we can put it down to the announcment that there are likely to be significant changes to the management structure of the business. Even at a global level there are no real peers in the luxury goods industry to compare Richemont to. LVMH has booze and handbags aplenty, Kering owns Puma and Volcom, so it is hardly comparable. Prada. Nope. Tiffany & Co., maybe it is close enough. The quality of the brands of Richemont are at a "higher" level. Some of their Maisons (houses) are timeless themselves. See a recent deep dive - Richemont review - balance sheet and brands for the future.


Richemont review - balance sheet and brands for the future


I did a deep dive into Richemont yesterday. There is no doubt that the stock has been more than a little disappointing. Luxury goods across the globe have looked sloppy as fewer vacations to Europe coincide with lower purchases by foreigners, equally however since the current Chinese leadership has cut down on corruption and the culture of "gifting", there has been a slowdown in sales. Richemont as it exists nowadays is less than 30 years old. There was the tobacco element for more than half the life of the company, the cash flows were used to fund some of the acquisitions. They own some of the most prestigious and iconic luxury brands on the planet, Cartier and Van Cleef & Arpels, as well as watch brands like Vacheron Constantin, Piaget, Panerai, Baume & Mercier, amongst others. They own Chloe and Lancel, Dunhill, Mont Blanc and Peter Millar, Purdey and Shanghai Tang, in a division of "other" that contributes only 16 percent of overall sales.


Richemont 5month numbers - Rev down


There is very little that Richemont can do about a crackdown on graft and gifting in China, there is even less that the company can do about terrorism and people delaying travel to Europe. On those said trips, often people buy the expensive products that they produce. The company will continue to produce their quality products, which are timeless in themselves. In fact, as we often say around these parts, the longer they own the timeless and obviously quality brands, the more valuable the name and brand becomes. I look at LV bags and can't see the attraction, mind you, what the hell do I know about bags! The brands are what they are, old, quality and pretty much timeless.


Richemont FY numbers - limited growth


On Friday morning we had the full year numbers from Richemont. There were many moving parts to the results but on the whole the numbers were disappointing, the stock dropped around 5%. Here they are - Richemont audited consolidated results for the year ended 31 March 2016. (Investor relations and management do a great job in making these documents easy to read/ use)


Sloppy sales update


Richemont fell short in a sales update that may have been somewhat shy of expectations, for the first time however it was evident that the terrorist attacks in Paris has been a part of the softer sales. The attacks of course were just over two months ago, 13 November. Those attacks certainly shook all and sundry, Paris is of course one of the most visited cities in the world. If I am not mistaken, from my reading, the Notre Dame de Paris is the most visited free place in the world, you don't have to pay to get into a church. That church took nearly 100 years to build, "things" were a little slow back then.


Richemont 6 month numbers


Richemont have released six month results to end September, sales up 15 percent in Euro terms, 3 percent increase at constant exchange rates to 5.821 billion Euros. Such is the weakness of the Euro relative to their selling territories. Gross profits increased 13 percent to 3.786 billion Euros. Operating margins were described by the company as robust, they did sink 200 basis points to 24 percent. Yet, after all of that, profits managed to increase 22 percent a share, equally earnings per share increased by 22 percent to 1.949 Euros.


Richemont gets their YOOX shares


Richemont have announced this morning that the merger between their Net-a-Porter and Italian online luxury company, YOOX has been completed. That took more than six months, if you need the refresher of how the investment is going to work, cast your mind back to late March and when we wrote about it: Net-A-Porter merges with YOOX. What Richemont (and by extension, you the shareholder) gets is 65,599,597 Yoox Net-a-porter shares in the bigger company, one that holds both platforms now. That is half of the business.


5 Month sales update


Richemont have released a five month trading update this morning. Whilst the currency swings were negative on the way down (for the Euro), they have been equally positive on the way up. At real exchange rates sales only increased 4 percent, in reported currency (Euros) sales increased 16 percent. Europe itself has made a massive comeback, confirming once again that the European recovery has been in full swing here.


Richemont teaming up to stay exclusive


Johann Rupert, chairman and controlling shareholder of Richemont, wants to team up with his rivals. What gives? And all this is not long after Richemont had injected their Net-a-Porter business in return for an equity stake in Yoox. They have equal equity for now, they do not have control of the business. The Bloomberg story is as follows: Richemont Invites LVMH to Join Website to Compete With Amazon. The plan is to actually use the Yoox Net-a-porter platform, by getting LVMH and Kering SA to have equity in the business, Yoox that is. Johann Rupert was talking at the FT Business of Luxury Summit in the picturesque town of Monaco.


Richemont full year numbers


Richemont results have hit the screen this morning. Another "Swiss" company, this one of course has a primary listing in Zurich. Something that I guess could happen with Mediclinic in due course. The South African listed entity is the GDR, a Global Depositary receipt, for every ten shares that you own here in South Africa, it is equivalent to 1 share of the listed entity in Switzerland.


Net-A-Porter merges with YOOX


A couple more stories about NET-A-PORTER, this time the Yoox story, the NYT is following that -> Yoox Group in Talks With Luxury Online Seller Net-a-Porter. As you can see, when Richemont purchased the business and valued the whole thing at 520 million Dollars in 2010, the company was not altogether sure where all of this was going.


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