The group ended the six months to September with a healthy net cash position of €4.8-billion, of which €1.5-billion was cash generated from operating activities. Speaking at the results presentation, group chief financial officer Burkhart Grundt said this was particularly notable given the €1.9-billion dividend cash outflow in September, which represented an €800-million year-on-year increase.

Sales were positively impacted by favourable currency movements during the period. The strongest sales increases came from America, Europe and Japan. A 76% sales increase in Japan was led mainly by local customers, while sales in Europe were up 45%, benefitting from inbound American and Middle East tourist spending as well as robust domestic demand.

When it came to sales channels, 67% of sales were via direct retail, 6% via online channels, and 27% via wholesalers. New store openings included the Van Cleef & Arpels in San Francisco, A. Lange & Söhne in Boston, A. Lange & Söhne in Shanghai. The period under review also included relocations and renovations, such as Cartier in Seoul, Vacheron Constantin in Dubai Mall, Delvaux in Paris and Montblanc as well in Seoul. Buccellati’s website was relaunched with enhanced user experience and a new e-commerce capability.

“Profit from continuing operations rose 40% to €2.1-billion,” Grundt told shareholders, adding that this reflected the benefit of past decisions. “Along with watch inventory buybacks, we effectively managed the sell-in and buy-out ratio while optimising our wholesale network. These actions have led to a sound inventory position and stronger partnerships with our multi-brand retail partners,” he said.

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The company’s digital transformation journey, which provided another route to market proved particularly beneficial when stores had to temporarily close. Grundt says this has inspired management to move forward with its luxury retail platform where the frontiers between bricks and online retail disappear. The recent August sale of a controlling interest in Yoox Net-a-Porter (YNAP) to Farfetch and Alabar to create a neutral industry platform is a major step in this direction. In the first stage of the transaction Farfetch and Alabbar will acquire 47.5% and 3.2%, respectively, of YNAP’s share capital from Richemont, making YNAP a neutral platform with no controlling shareholder.

Richemont Chairman, Johann Rupert. (Photo: Alberto Bernasconi / Bloomberg via Getty Images)

The potential second and final stage of the transaction provides for Farfetch to increase its ownership of YNAP’s share capital to 100% through a put and call option mechanism. Completion of the second and final stage of the transaction remains subject to the receipt of certain regulatory approvals. YNAP’s results for the period are presented as discontinued operations.

Addressing queries from analysts and investors about how Richemont is likely to fare during a significant downturn, Grundt said he could not respond directly given the number of unknowns. “However, we can highlight how different Richemont is today compared to 2008. First, with more than €19-billion in sales and €3.4-billion in operating profit for the 2022 financial year, we have experienced a steep change compared with fiscal ’08 sales and operating profit of €2.7-billion and €0.8-billion, respectively. We have progressed strategically from being very wholesale-distribution driven to becoming online and physical retail distribution focused,” he says.   

Chairman Johann Rupert points out that with a 24% sales growth overall and higher sales in all regions and distribution channels, the jewellery brands of Buccellati, Cartier and Van Cleef & Arpels, reaffirmed their leading position. “To further support their strong development, manufacturing sites are being expanded, operational teams reinforced, and communication initiatives intensified. Their superior growth was driven by the retail channel, which generated over three quarters of the Maisons’ sales,” he says.

When it comes to ESG (environmental, social, governance) targets, Richemont is aiming to reach a 10% energy saving target for gas electricity in offices and boutiques in the next six months. Management plans to achieve this through a series of energy saving measures including reducing temperatures by a minimum of 1% across all sites. Earlier this year, for the third consecutive year, Richemont made the list of Forbes’ 800 best global employers. BM/DM