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Thursday, May 19, 2011

Richemont Reports Record Jewelry and Watch Sales

Cie. Financiere Richemont SA reported Thursday that sales for its fiscal year increased 33 percent to nearly 6.9 billion euros ($9.84 billion). Operating profit for the year, ended March 31, increased 63 percent to 1.35 billion euros. ($1.92 billion).

The Geneva-based luxury goods company reported strong sales across all segments and regions. Among the big winners for the year were jewelry and watch sales.

Richemont’s jewelry “masions,” Cartier and Van Cleef & Arpels, reported a 29 percent increase in sales to a record 3.48 billion euros ($4.9 billion), based on broad-based popularity in terms of geography and product lines. Brand owned boutiques did particularly well.

Its watch properties ( Vacheron Constantin, Baume & Mercier, Jaeger-LeCoultre, Lange & Söhne, Officine Panerai, IWC, Piaget, and Roger Dubuis), reported a 31 percent sales increase for the year to a record 1.77 billion euros ($2.52 billion), with all specialist watchmakers performing well, with the expected exception of, Baume & Mercier, which is undergoing restructuring. Operating margin increased to 21.4 percent of sales, in spite of higher costs of sales due to the appreciation of the Swiss franc and higher precious material prices.
(sales by region, outlook and CEO quotes after jump)

“We are pleased to report that Richemont has met the challenging environment of the past year by achieving strong sales growth across all segments and all geographic regions,” said Johann Rupert, Richemont executive chairman and CEO. “The year under review has seen record sales and profits for our jewelry maisons and specialist watchmakers, despite the stronger Swiss franc.…, which was acquired in April 2010, is performing ahead of its business plan.”

The company’s retail sales exceeded 50 percent of its overall sale for the first time because it was also the first time online luxury goods retailer,, was included with total sales. Excluding the e-commerce business, sales increased by 24 percent for the year. Group-owned boutiques increased to 876 boutiques with store openings primarily in growth markets, such as the Asia-Pacific region.

The Group’s wholesale business, including sales to franchise partners, grew despite being negatively impacted by the de-stocking by business partners, planned reduction in the number of points of sale in some key markets, most notably in the United States, and constraints in the supply of finished products.

Sales by Region
Sales in Europe, which account for 38 percent of total group sales, increased by 23 percent to 2.58 billion euros ($3.67 billion), reflecting purchases made by local clients and tourists and the integration of, to its retail sales mix.

The Asia-Pacific region now accounts for 37 percent of total group sales due to expansion by the company’s brands to take advantage of the increased wealth in the region. Sales for the year increased 36 percent to 2.57 billion euros ($3.66 billion).

Sales in the Americas, which account for 14 percent of group sales, increased 40 percent to 998 million euros. The company says that this strength in sales reflects both weak comparative sales, the integration of, and positive exchange rates. However, growth in the region also stems from a strong retail performance and higher levels of productivity in its wholesale network. The reported growth has occurred despite the reduction in the number of points of sale in the region.

Japan, which accounts for about 11 percent of group sales, reported an 18 percent increase in sales to 737 million euros ($1.05 billion), largely due to the significant appreciation of the yen. Yen-denominated sales increased by 1 percent, reflecting positive responses to new products and a stabilization of the Maisons’ businesses. The earthquake and tsunami of March 11 and the aftermath occurred shortly before the group’s financial year-end and consequently had only a minimal impact on the group’s performance.

In its outlook, Rupert said sales in the month of April were 32 percent above the comparative period, or 35 percent at constant exchange rates.

“In an environment currently marked by geopolitical unrest and currency instability, we hope that this positive trend will be confirmed in the coming months,” he said, adding that capital investment in its companies over the next two years will run from 6 percent to 8 percent of total sales.

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