Richemont demonstrates sustained resilience for the six-month period ended 30 September 2024

AD HOC ANNOUNCEMENT PURSUANT TO ART. 53 LR
8 NOVEMBER 2024

Please find below the Highlights and Chairman’s commentary from Richemont FY25 Interim Results Announcement.

RICHEMONT DEMONSTRATES SUSTAINED RESILIENCE
FOR THE SIX-MONTH PERIOD ENDED 30 SEPTEMBER 2024

Group highlights

• Sales at € 10.1 billion and operating profit from continuing operations at € 2.2 billion in a challenging macroeconomic and geopolitical context, supported by ongoing investment into distribution and manufacturing assets
• Strategic developments
  • Completion of the acquisition of distinctive Italian jewellery Maison Vhernier
  • Signature of an agreement by which Mytheresa will acquire YNAP in exchange for a 33% equity stake in Mytheresa, subject to customary closing conditions
• Strengthened governance with the appointment of new Group CEO; new leadership in place at Cartier and Van Cleef & Arpels
  
  

Financial highlights

• Resilient H1 top-line performance, delivering stable sales at constant exchange rates, supported by the Group’s balanced geographical mix and mid-single digit growth at Jewellery Maisons; down 1% at actual exchange rates
• Solid growth in sales across all regions, except for Asia Pacific; double-digit growth in the Americas, reinforcing the US’ position as the largest individual market for the Group
• Continued growth in direct-to-client sales, now accounting for 76% of Group sales
• Operating profit from continuing operations down by 17%, or by 12% at constant exchange rates, resulting in a 21.9% operating margin
  • Continued growth at Jewellery Maisons, with sales up 2% at actual exchange rates (+4% at constant exchange rates), delivering a 32.9% operating margin
  • A decline in sales at Specialist Watchmakers, by 17% at actual exchange rates (-16% at constant exchange rates) with a 9.7% operating margin
  • Sales up 4% in the ‘Other’ business area, at both actual and constant exchange rates; € 52 million operating loss, with F&A Maisons posting a -2% operating margin
• € 1.7 billion profit for the period from continuing operations; € 1.3 billion loss from discontinued operations mainly due to the non-cash write-down of YNAP
• Solid net cash position of € 6.1 billion, with € 1.2 billion cash flow generated from operating activities
  
  

Key financial data (unaudited)

Six months ended 30 September	2024	2023	change
Sales	€ 10 077 m	€ 10 221 m	-1%
Gross profit	€ 6 771 m	€ 6 973 m	-3%
Gross margin	67.2%	68.2%	-100 bps
Operating profit	€ 2 206 m	€ 2 655 m	-17%
Operating margin	21.9%	26.0%	-410 bps
Profit for the period from continuing operations	€ 1 729 m	€ 2 160 m	-20%
Loss for the period from discontinued operations	€ (1 272) m	€ (655) m
Profit for the period	€ 457 m	€ 1 505 m
Earnings per 'A' share/10 'B' shares, diluted basis	€ 0.779	€ 2.601
Cash flow generated from operating activities	€ 1 249 m	€ 1 666 m	€ (417) m
Net cash position	€ 6 108 m	€ 5 785 m

Chairman’s commentary

Overview of results

In the first six months of the financial year, Richemont demonstrated sustained resilience, against a challenging macroeconomic and geopolitical backdrop, supported by ongoing investment in our distribution and manufacturing capacities. Benefitting from the Group’s balanced geographic mix and continued strength at our Jewellery Maisons, sales from continuing operations were stable at constant exchange rates (-1% at actual exchange rates) at € 10.1 billion. Operating profit from continuing operations came in at € 2.2 billion, down 12% at constant exchange rates (-17% at actual exchange rates), largely reflecting the impact of the decline in sales at our Specialist Watchmakers, a slight gross margin erosion and ongoing investments for our Maisons’ long-term growth.

The Group recorded very solid sales progress in most regions, led by the Americas and Japan in value, which grew 10% and 32% respectively at actual exchange rates. Both Europe and Middle East & Africa also posted robust growth. The Group’s balanced regional mix, building on several growth engines, contributed to offsetting the 19% decrease in Asia Pacific sales, led by China. Direct to client sales rose further, now representing 76% of Group sales.

With 2% sales growth overall (+4% at constant exchange rates), our Jewellery Maisons, Buccellati, Cartier and Van Cleef & Arpels, continued to show strength and gain share. Limited price increases over recent months were not sufficient to fully offset raw material cost increases, notably that of gold. Our Jewellery Maisons nonetheless delivered a € 2.3 billion operating result and a corresponding 32.9% operating margin.

As already alluded to at our last Annual General Meeting of shareholders in September, the global watch market is experiencing a slowdown, particularly in China, which is affecting all watchmaking brands globally, with the high-end segments showing greater resilience. This highlights the need for discipline and caution regarding overproduction and underscores the importance of adapting to changing market conditions, which will ultimately contribute to maintaining higher product desirability.  Looking back at the first half of our fiscal year, our Specialist Watchmakers Maisons were affected in different ways, influenced by their regional exposure and product mix. Largely reflecting their significant exposure to the Asia Pacific region, our Specialist Watchmakers recorded a 17% year-on-year sales decline (-16% at constant exchange rates) to € 1.7 billion.  As a consequence of lower sales on fixed operating costs and a strong Swiss franc, operating result amounted to € 160 million, corresponding to a 9.7% operating margin.

Sales at our ‘Other’ business area increased by 4% at both actual and constant exchange rates. Sales at our Fashion & Accessories Maisons were 2% higher than the prior-year period, driven by Alaïa’s and Peter Millar’s continued outperformance. Overall, the ‘Other’ business area recorded a € 52 million operating loss, € 23 million of which for the F&A Maisons.

At Group level, operating profit from continuing operations was also significantly impacted by negative foreign exchange movements, but still delivered a 21.9% operating margin. Profit for the period from continuing operations decreased to € 1.7 billion. The € 1.3 billion loss from discontinued operations reflected the combined result of YOOX NET-A-PORTER (‘YNAP’) for the six-month period and the € 1.2 billion non-cash write-down on the revaluation of YNAP’s net assets, classified as ‘held for sale’, to its fair value, following the agreement signed with Mytheresa in October. Importantly, amidst ongoing macro uncertainty, our net cash position remained solid at € 6.1 billion on 30 September 2024. This excludes YNAP’s net cash position of € 0.1 billion, presented as assets and liabilities of disposal group held for sale.

Strengthening of our operations and portfolio of Jewellery Maisons

On 12 September 2024, we completed the acquisition of 100% of Vhernier S.p.A, the distinctive Italian jewellery Maison, in a private transaction, following fulfilment of customary conditions and clearing of applicable regulatory approvals. Maison Vhernier brings a distinguished and distinctive design that perfectly complements our existing collection of renowned Jewellery Maisons. We very much look forward to leveraging the Group’s infrastructure and know-how to realise the Maison’s full potential in the international jewellery market.

On 1 June 2024, Nicolas Bos, formerly Chief Executive Officer of Van Cleef & Arpels, assumed the role of Chief Executive Officer of Richemont and joined the Senior Executive Committee, with direct oversight of all the Maisons, functions and regions. Nicolas has had a fantastic track record in the course of his 32-year career within the Group, culminating in his having transformed Van Cleef & Arpels into the exquisite jewellery powerhouse it is today. I know that Nicolas, supported by a strong leadership across the Group will successfully steer Richemont through the next phase of its evolution.

As a case in point, on 1 September 2024, two strong leaders were appointed at the helm of our flagship Jewellery Maisons, reporting to Nicolas. I am very pleased that Louis Ferla became President and CEO of Cartier, succeeding Cyrille Vigneron who decided to retire after eight successful years in the role. Throughout his 23-year career at Richemont, principally at Cartier and since 2017 as CEO of Vacheron Constantin, Louis has earned the respect of both colleagues and the industry at large. I have every confidence that Cartier will continue to thrive under his leadership. I would also like to once again express my gratitude to Cyrille for his invaluable contributions over the years. Likewise, I am delighted that Catherine Rénier succeeded Nicolas as CEO of Van Cleef & Arpels, following her successful 25-year career within the Group, which spanned Cartier, Van Cleef & Arpels and Jaeger-LeCoultre where she had been CEO since 2018. I am confident that Catherine brings the perfect mix of experience and leadership skills to the role, which will prove invaluable to ensure Van Cleef & Arpels’ continued success.

YOOX-NET-A-PORTER (‘YNAP’)

On 7 October, Richemont announced that it had entered into binding agreements for the acquisition of 100% of the share capital of YNAP by Mytheresa, a leading luxury multi-brand digital group. Closing of the transaction is expected in the first half of 2025 subject to customary conditions, including regular approvals. At transaction closing, Richemont will sell YNAP to Mytheresa with a cash position of € 555 million and no financial debt, subject to customary adjustments, in exchange for shares to be issued by Mytheresa representing 33% of its fully diluted share capital. Richemont will provide a € 100 million revolving credit facility to finance YNAP’s corporate needs.

We are pleased to have found such a good home for YNAP. 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.

Annual General Meeting and Board changes

At the Annual General Meeting (‘AGM’) on 11 September 2024, two new directors were elected to the Board: Gary Saage as Non-executive Director, and Nicolas Bos as Executive Director. I firmly believe that Gary is ideally suited for the position of Chairman of the all-important Audit Committee, which he has assumed following Dillie Malherbe’s decision to step down from the role.

Also at this year’s AGM, shareholders re-elected Wendy Luhabe as the ‘A’ shareholders’ representative and all Board members who stood for re-election for a further one-year term.

Publication and shareholder approval of our Non-Financial Report

In relation to sustainability, which guides how we operate as a responsible business, on 13 June, Richemont published its Non-Financial Report alongside its Annual Report and Accounts, for the year ending 31 March 2024. Our Non-Financial Report 2024 covers amongst other topics, the Richemont sustainability management approach as well as reporting on material environmental, social and governance (‘ESG’) topics prepared in accordance with the Global Reporting Initiative (‘GRI’) Standards, and independently assured. Our Non-Financial Report was put to the vote for the first time at this year’s AGM where it was approved.

We are devoting considerable energy to meeting increasingly stringent EU and Swiss regulatory requirements. In the context of various requirements from different regulatory bodies, we have decided that we will meet the highest hurdles set by these authorities. Ultimately, we plan to abide by what is the right thing to do. This requires our constant attention and transversal collaboration, both within the Group and externally.

Concluding remarks

In the first half of this fiscal year, we continued to deliver sustained resilience in a world where uncertainty has become the norm. 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.

The first half of our fiscal year was also marked by a series of notable achievements. We welcomed Vhernier to our family of leading Jewellery Maisons, shareholders adopted our first Non-Financial Report, and we found a great home for YNAP in Mytheresa where their combined strengths will contribute to delighting even more customers and brand partners. Importantly, we also further strengthened the Group’s leadership and governance with the appointments of Nicolas as CEO, Bram Schot as Deputy Chairman of the Board, and those of Catherine and Louis, two highly experienced leaders with strong track records at the helm of Van Cleef & Arpels and Cartier respectively.

What we are seeing in the world today is not unprecedented. 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.

I would like to take this opportunity to thank all our talented teams across the world for their passion and commitment. I never cease to be impressed by the diversity of talent that we have at Richemont and the resulting creativity and craftsmanship, which are key ingredients to making our Maisons so unique and attractive to our valued customers.

Johann Rupert
Chairman

Compagnie Financière Richemont SA

About Richemont

At Richemont, we craft the future. Our unique portfolio includes prestigious Maisons distinguished by their craftsmanship and creativity. Richemont’s ambition is to nurture its Maisons and businesses and enable them to grow and prosper in a responsible, sustainable manner over the long term.

Richemont operates in three business areas: Jewellery Maisons with Buccellati, Cartier, Van Cleef & Arpels and Vhernier; Specialist Watchmakers with A. Lange & Söhne, Baume & Mercier, IWC Schaffhausen, Jaeger-LeCoultre, Panerai, Piaget, Roger Dubuis and Vacheron Constantin; and Other, primarily Fashion & Accessories Maisons with Alaïa, Chloé, Delvaux, dunhill, Gianvito Rossi, Montblanc, Peter Millar including G/FORE, Purdey, Serapian as well as Watchfinder & Co. In addition, Richemont operates NET-A-PORTER, MR PORTER, THE OUTNET, YOOX and the OFS division. Find out more at https://www.richemont.com/.

Disclaimer

This document contains forward-looking statements as that term is defined in the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not guarantees of future performance. Richemont's forward-looking statements are based on management's current expectations and assumptions regarding the Company's business and performance, the economy and other future conditions and forecasts of future events, circumstances and results. Our retail stores are heavily dependent on the ability and desire of consumers to travel and shop and a decline in consumers traffic could have a negative effect on our comparable store sales and/or average sales per square foot and store profitability resulting in impairment charges, which could have a material adverse effect on our business, results of operations and financial condition. Reduced travel resulting from economic conditions, retail store closure orders of civil authorities, travel restrictions, travel concerns and other circumstances, including disease epidemics and other health-related concerns, could have a material adverse effect on us, particularly if such events impact our customers’ desire to travel to our retail stores. International conflicts or wars, including resulting sanctions and restrictions on importation and exportation of finished products and/or raw materials, whether self-imposed or imposed by international countries, non-state entities or others, may also impact these forward-looking statements. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside the Group's control. Richemont does not undertake to update, nor does it have any obligation to provide updates of, or to revise, any forward-looking statements.

© Richemont 2024

This announcement does not contain full details and should not be used as a basis for any investment decision in relation to the Company’s shares. Please find the full announcement available in PDF below: 

Richemont FY25 Interim Results PDF EN | Richemont FY25 Interim Results PDF FR (abridged)