Dive Brief:
- Compagnie Financière Richemont SA reported first half fiscal 2025 sales of 10.1 billion euros, or about $10.7 million, representing a year-over-year drop of 1%, according to a Friday release.
- Operating profit from continuing operations was down 17% to 2.2 billion euros, due in part to a 17% decline in sales at the company’s Specialist Watchmakers division. The drop was somewhat offset by a 2% increase at Jewellery Maisons and a 4% rise in the company's other business sector, including a 2% uptick in Fashion and Accessories Maisons.
- The overall “Other” area reported a 52 million euro operating loss, with a 23 million euros loss coming from the fashion and accessories category, which includes Alaïa, Chloé, Gianvito Rossi and Watchfinder & Co.
Dive Insight:
Luxury sector challenges continue to dog some of the fashion industry’s biggest players, including LVMH and Kering, both of which have reported negative year-over-year earnings in recent weeks.
Meanwhile, losses at Richemont continue to reflect problems in China.
Sales in the Asia Pacific region fell 19% year over year, with a 27% decline in China. The company attributed the drop to “reduced consumer spending and strong comparatives, as well as the impact of higher sales to Chinese tourists outside of the region,” particularly in Japan, where sales were up 32% for the period.
First half sales in the combined Middle East and Africa region were up 11%, while sales in the Americas were up 10%, and sales in Europe were up 5%.
“In the first half of this fiscal year, we continued to deliver sustained resilience in a world where uncertainty has become the norm,” Richemont Chairman Johann Rupert said in the release. “We saw solid sales growth across most of our regions offsetting continued weakness in Chinese demand, which, as I had predicted, will take longer to recover and is particularly affecting our Specialist Watchmakers.”
Rupert also discussed the October sale of Yoox-Net-A-Porter to luxury digital platform Mytheresa for 555 million euros, which he said is expected to close in the first half of 2025.
“We are pleased to have found such a good home for YNAP,” Rupert said. “Mytheresa is ideally placed to harness its own strengths in combination with YNAP’s assets and reputation as a trusted partner to many leading global luxury brands and as a pioneer in high-end customer services, to further delight customers and brand partners across the world.”
Following completion of the sale, Mytheresa will issue shares to Richemont representing 33% of its fully diluted share capital, and Richemont has agreed to provide a 100 million euros in revolving credit facility “to finance YNAP’s corporate needs,” Rupert said.
Richemont has also made several recent leadership changes, including the appointment of Nicolas Bos as CEO, who began in June, and new CEOs at Cartier and Van Cleef & Arpels.
“What we are seeing in the world today is not unprecedented,” Rupert said. “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. Looking ahead, whilst I remain cautious in this uncertain context, I am therefore confident in our ability to navigate the current as well as future cycles and to deliver sustained value over the long term for all stakeholders.”
