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Strong US, China Showing Drives Richemont’s $3.12B FY 2018-19 Profit

Luxury group Richemont, which owns the Cartier and Van Cleef & Arpels jewellery brands along with the IWC Schaffhausen, Jaeger-LeCoultre and Piaget watch brands among others, reported that its net profit for fiscal 2018-19 more than doubled to €2.79 billion ($3.12 billion), including an extraordinary gain of €1.38 billion ($1.5 billion) linked to the Yoox Net-A-Porter (YNAP) acquisition.

Including its recently acquired online distribution systems like YNAP and Watchfinder, sales were 27 percent up over the previous year at €13.99 billion ($15.64 billion). However, excluding online distribution — which have shown an operating loss — sales were just 8 percent higher.

The group saw double-digit growth in mainland China and the US. However, an otherwise shining performance was dulled by the weak profitability of the group’s watch division, which has shown an operating margin of just 12.7 percent, while the jewellery division reported a margin of 31.5 percent.

The group’s watch segment is in the midst of restructuring distribution to focus more on online channels and directly owned stores rather than traditional multi-brand retailers. The group’s watch brands include A. Lange & Söhne, Baume & Mercier, IWC Schaffhausen, Jaeger-LeCoultre, Officine Panerai, Piaget, Roger Dubuis, Vacheron Constantin and a joint venture wit hthe Ralph Lauren Watch & Jewelry Co.

In a move to boost its e-commerce segment, Richemont formed a joint-venture with China’s Alibaba and acquired online distributors YNAP as well as second-hand specialist Watchfinder. So far, the online distribution segment has shown low double-digit sales growth, while registering higher-than-expected operating losses.

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