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Last week Richemont released fresh quarterly numbers. It was a complete reversal of the previous set, three months ago. After November's numbers, the share price dropped 5% on fears that luxury spending was slowing. This time the share price popped over 10%!
The market was expecting sales growth of around 5%, the group managed to deliver 8%. The all-important Asia-Pacific region grew 13%, driven by a 25% increase in sales from mainland China. European sales were lower by 3% due to reduced tourist spending, but that was more than made up for by the growth in all other regions. It seems many people were spending money in their 'home market' instead of buying goods on holiday.
Online sales have become a problem for the group, dropping by another 5%. Richemont had planned to sell its online platform, YOOX NET-A-PORTER, to Farfetch, a competitor. That deal has collapsed as Farfetch ran out of money and has had to restructure itself.
Selling high-end items online seems like a very tough business. Most customers prefer walking into a Cartier shop and being treated like royalty. You don't get that when sitting behind a computer. If the group can't find a buyer for the platform, I wouldn't be surprised to see it shut down.
Richemont is very conservatively run, and its cash position has grown from EUR5.5 billion to EUR6.8 billion. It ensures the long-term success and survival of the company.
