Richemont Q3 Revenue Up 24%

The Cartier store on 5th Avenue in New York. One of Richemont's luxury brands.

Luxury goods conglomerate Cie. Financiere Richemont SA said Monday that third quarter revenue increased 24 percent year-over-year to 2.62 billion euros ($3.32 billion) with all regions and nearly all of its brands reporting double-digit increases.

Revenue for the month of December alone rose 21 percent, compared with the same period of the prior year.

“The group’s overall performance remains solid,” said Johann Rupert, executive chairman and Group CEO. “The group’s activities over the past nine months enable us to reconfirm our expectations that operating profit for the full year will be significantly higher than last year.”

The largest increase for the Geneva-based company by region was is Asia, which reported a 36-percent rise for the period to 1.05 billion euros ($1.33 billion). Asia is now the company’s biggest market accounting for about 40 percent of total sales.

Europe, its second-largest market, saw sales increase 15 percent for the period to 914 million euros ($1.15 billion). In the Americas, revenue rose 24 percent to 382 million euros ($484 million). In Japan, revenue increased 10 percent to 272 million euros.

Among its jewelry brands (Cartier and Van Cleef & Arpels) sales rose by 25 percent to $1.36 billion ($1.72 billion).

In its specialist watchmakers division (Jaeger-LeCoultre, Piaget, IWC, Baume & Mercier, Vacheron Constantin, Officine Panerai, A. Lange & Söhne and Roger Dubuis, as well as the Ralph Lauren Watch and Jewelry joint venture) sales increased 27 percent to 697 million euros ($884 million).

Montblanc, listed as a separate division was the only brand to post less than double-digit gains for the period at 1 percent growth to 220 million euros ($279 million).

Among brands Alfred Dunhill, Lancel, Net-a-Porter and Chloé, listed as “Other” by the company, sales rose 29 percent to 339 million euros ($430 million).

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Richemont Expects Huge Sales and Profits as Hard Luxuries Continue to Sparkle

Montblanc boutique in Hamburg. Photo credit: Anthony DeMarco

A luxury slowdown in China, a European economy under constant crisis, and sluggish growth in the U.S. has failed to slow the growth in the sale of “hard luxuries” (jewelry and watches). The latest example is Geneva-based Compagnie Financière Richemont, which issued a statement Monday saying that it expects first half profits to rise from 20 percent to 40 percent, year-over-year.

Richemont—whose brands include Cartier, Van Cleef & Arpels, Montblanc and Vacheron Constantin—was required to make this statement prior to its sales and profits reports for the first half of the year. SIX Swiss Exchange requires that issuers make an immediate announcement when “the foreseeable profit or loss for a given period is expected to deviate significantly from the profit or loss achieved in the prior-year period.”

In accordance with these requirements Richemont said that sales for the four months ended in July rose 24 percent on a reported basis and 13 percent on a constant-exchange basis. Based on these results, Richemont’s said its operating profit for the six months ending September 30 is likely to show an increase of between 20 percent and 40 percent compared to the first six months of the last financial year.  Net profit for the same period may also increase by 20 percent and 40 percent.

Richemont sales for the five months ending August 31 will be announced on September 5 first-half results for period ending September 30 will be announced November 9.

This is the latest in financial reports that are revealing the resiliency and strength in hard luxuries.

* In late July, Paris-based LVMH reported revenue growth of 26 percent, year-over-year to $16 billion for the first half of 2012. Group profit rose 28 percent to $2 billion. The luxury group, whose jewelry and watch brands include Tag Heuer, Hublot and Bulgari, acquired in June 2011, reported that total jewelry and watch sales rose 113 percent to $1.6 billion, with Bulgari's revenue now included. Organic growth was 13 percent.

* A few days earlier, Swatch Group, the world’s largest watch company, said its watch and jewelry sales for the first half of 2012 increased 16.7 percent to $3.42 billion, year-over-year. The company owns 19 watch and jewelry brands in all market segments, including Swatch, Breguet and Longines.

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Richemont Sales Up 21%, Profit Up 52%

Swiss luxury goods conglomerate, Compagnie Financière Richemont, said Friday that sales increased, year-over-year, for the first half of the fiscal year by 21 percent to €5.1 billion ($6.5 billion). By constant exchange rates sales grew 12 percent.

Profit for the period rose 52 percent to €1.08 billion ($1.37 billion); with operating profit up by 28 percent to €1.38 billion ($1.75 billion), benefiting from favorable currency movements, and gross profit up 24 percent to €3.31 billion ($4.2 billion). Operating margin gained 150 basis points to reach 27 percent.

The Geneva-based company cited “solid growth in all segments, regions and channels” along with favorable currency rates and Asian tourism in Europe for the strong performance.

Richemont owns many of the world’s best-known luxury brands (known as “maisons” by the company) including Cartier, Montblanc, Vacheron Constantin, Van Cleef & Arpels and Piaget. It also has wholesale businesses and owns the luxury retail website, Net-A-Porter.com. A list of its businesses can be found by following this link.

“The Group’s maisons benefited from favorable exchange rates effects, successful product launches as well as strong pricing power,” said Johann Rupert, Richemont executive chairman and CEO. “The increase in net profit was well above the prior period, reflecting both the growth in operating results and the non-recurrence of non-cash losses, which stemmed from the Swiss franc’s appreciation against the euro.”

He added, “Sales growth rates moderated, as evidenced by the October sales which grew by 12 percent at actual exchange rates. At constant exchange rates, they were 7 percent higher. Richemont is seeing good growth in Europe, supported by Asian tourism which is compensating for slower domestic Asia Pacific sales. Retail continued to lead wholesale, reflecting robust jewelry sales.”

Rupert did warn that sales and profits could slow as exchange rates will like be “less favorable” for the remainder of the fiscal year.

By region the company reported that sales in Europe accounted for 36 percent of overall sales as the region enjoyed good growth, with tourists driving the above-average increase. The highest growth rates were in the Maisons’ own boutiques in tourist destinations, including the Middle East. Europe’s reported a 23 percent growth in sales for the period to €1.85 billion ($2.35). At constant exchange rates, sales increased by 19 percent.

Asia Pacific remains the strongest region for Richemont but sales growth has slowed. The region accounted for 41 percent of the Group’s total, with Hong Kong and mainland China the two largest markets. “Sales growth in our maisons’ own boutiques in the region was well above the increase in sales to wholesale partners, partly reflecting the number of boutique openings in the last two years,” the company said. Asia reported a 22 percent growth in sales for the period to €2.1 billion ($2.67). At constant exchange rates, sales increased 9 percent.

After two years of what the company termed as “outstanding sales,” the Americas region reported that sales grew 16 percent to €698 million ($877 million). However, at constant exchange rates, growth was 4 percent. The region represented 14 percent of overall sales for Richemont.

Japan, which Richemont lists separately, saw what the company terms as “continued momentum” in sales in all retail segments. The struggling market saw its sales increase by 18 percent to €448 million ($570 million). At constant exchange rates the increase was 4 percent.

Its group of jewelry brands saw sales grow by 20 percent to €2.6 billion ($3.3 billion) with operating results of €958 ($1.21 billion), a 31 percent increase. Operating margin gained 280 basis points to reach 36.7 percent.

Meanwhile, its specialist watchmakers group reported that sales increased 25 percent to €1.46 billion ($1.85 billion) with operating results of €470 ($592 million), a 51 percent increase. Operating margin gained 560 basis points to reach 32.2 percent.

Montblanc, the German brand known for its luxury writing instruments but also manufactures and sells luxury leather goods, jewelry and watches, is listed separately by Richemont. It reported that its sales increased 10 percent to €368 million ($468 million) with operating results of €53 million ($67.3 million), a 2 percent decline. Operating margin lost 180 basis points to reach 14.4 percent. Richemont said that Montblanc doesn’t benefit much from sales in tourist destinations.

For its other businesses—which includes Richemont’s Fashion and Accessories businesses, Net-a-Porter and watch component manufacturing activities—results are as follows:

* Fashion & Accessories maisons saw double-digit sales growth and operating profits were in line with the prior period at €25 million.

* Sales growth at Net-a-Porter is “normalizing” but continues to exceed the Group’s average. Net-a-Porter reduced its losses during the period, but generated a positive operating cashflow.

* Losses at the Group’s watch component manufacturing facilities were in line with the comparative period.

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Richemont Names Joint CEOs to Replace Johann Rupert

Johann Rupert to step down as
executive chairman and CEO.

The Board of Compagnie Financière Richemont SA announced Friday that it has approved a number of senior management changes, culminating with a change at the top of the company’s management structure. The announcement came as the luxury goods conglomerate reported a 21 percent increase in sales and a 52 percent increase in profit for the first half of the fiscal year.

Bernard Fornas, currently Cartier CEO, and Richard Lepeu, currently Richemont deputy CEO, will become joint CEOs of Richemont on April 1, 2013, under a succession plan that begins to go into effect on Jan. 1, 2013.

As previously announced, Stanislas de Quercize, currently CEO of Van Cleef & Arpels, will succeed Fornas as CEO of Cartier on Jan. 1, 2013. On the same date, Fornas and Lepeu will be appointed as joint deputy CEOs, reporting to Johann Rupert, executive chairman and CEO.

Rupert returned to the role of Richemont CEO when Norbert Platt, who held the position, took early retirement due to ill health in 2010. Rupert will step down from that role on March 31, 2013.

The following day, Fornas and Lepeu will become joint CEOs. Fornas will oversee Richemont’s maisons while Lepeu will continue to oversee Richemont’s central functions. Fornas and Lepeu together with Gary Saage, CFO, will form a senior executive committee for Richemont.

In addition, the Board approved certain changes to Richemont’s Group Management Committee.

The following executives will join the Group Management Committee, effective immediately: Lutz Bethge, CEO of Montblanc; Hans-Peter Bichelmeier, Group Operations director; Stanislas de Quercize; Georges Kern, CEO of IWC Schaffhausen; Jérôme Lambert, CEO of Jaeger-LeCoultre; and Philippe Léopold-Metzger, CEO of Piaget.

The following executives will retain their responsibilities but, reflecting the changed role of the Group Management Committee, will resign from the committee by the end of the current financial year: Giampiero Bodino, Group art director; Alan Grieve, director of Corporate Affairs; Mr Eloy Michotte, corporate finance director; and Jan Rupert, executive director.

Richemont, based in Geneva, owns many of the world’s best-known luxury brands (called “maisons” by the company) including Cartier, Montblanc, Vacheron Constantin, Van Cleef & Arpels and Piaget. It also has wholesale businesses and owns the luxury retail website, Net-A-Porter.com. A list of its businesses can be found by following this link.

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Richemont Announces Leadership Changes at Montblanc and Jaeger-LeCoultre

Lutz Bethge

Lutz Bethge, CEO of luxury brand Montblanc International, will leave the post to serve as non-executive chairman and head of the Supervisory Board of Montblanc. He will be replaced July 1 by Jérôme Lambert, CEO of Jaeger-LeCoultre. Also at that time Daniel Riedo, currently Industrial director of Jaeger-LeCoultre, will become the luxury watch brand’s CEO.

The announcements were made Wednesday by luxury holding company, Richemont, which owns both brands.

In his new position, Bethge will represent Montblanc externally and will be an advisor to the luxury brand on strategic matters. Bethge has spent 23 years in various roles with Montblanc, becoming CEO in 2007. He is credited for moving the luxury brand from a traditional writing instrument manufacturer to a diverse luxury brand, adding watches, leather goods and jewelry to its product line.

“The Maison has been recognized as a legitimate player in the watch business, providing continued and significant growth,” Richemont said in its statement.

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