LONDON – Slowing demand for luxury goods, especially in the Asia Pacific region, hampered Compagnie Financière’s Richemont’s growth in the fiscal fourth quarter, and full year.
In addition to reporting its fiscal 2024 numbers, Richemont also announced that Nicolas Bos, currently chief executive of Van Cleef & Arpels, has been named to the re-established role of CEO of Richemont, effective June 1.
In the fourth quarter, the watches and jewelry giant posted a 1 percent decline in sales at actual rates, and a 3 percent rise in full-year sales to 20.62 billion euros. At constant exchange, fourth-quarter sales rose by 2 percent, while full-year sales were up 8 percent.
Group operating profit was 4.8 billion euros, down 5 percent at reported rates and up 13 percent at constant exchange rates.
Richemont chairman Johann Rupert described the results as “solid,” and said the group was battling “unfavorable foreign exchange movements, demanding comparatives, and ongoing macroeconomic and geopolitical uncertainty.”
Shares in the Switzerland-based company were up 6 percent to 145.85 at 8:50 a.m. BST.
As usual, sales were driven by Richemont’s jewelry maisons, which include Cartier and Van Cleef & Arpels. Sales in the division rose by 6 percent to 14.24 billion euros, while operating profit was up 1 percent to 4.71 billion euros. Richemont said Buccellati sales more than quadrupled in the year.
In tune with market trends, the watch division did not fare as well due to the strong Swiss franc, and a slowdown demand. Sales were down 3 percent to 3.77 billion while operating profit fell 22 percent to 572 million euros.
Richemont’s “other” division, which includes fashion and online watch businesses, reported a 2 percent decline in sales to 2.61 billion euros and a 43 million loss at operating profit level. Richemont clarified that the fashion business broke even due to strict cost controls and softer sales.
All geographic regions posted growth for the full year at both actual and constant rates, although Richemont said, with Japan, Asia Pacific and the Middle East delivering double-digit growth.
In his statement, Rupert noted that Richemont experienced “a softening of sales” in the fourth quarter in Asia Pacific against challenging comparatives. He said the slowdown was more than offset by higher growth in all the other regions.
“As we predicted, a sustainable rebound in Chinese demand would take some time. We are encouraged by our increasingly balanced client mix across nationalities, with the emergence of several growth engines for the group. Our deliberate focus on local clients across geographies, supported by increased direct client interaction, is contributing to improved resilience,” he said.
At Richemont, sales at reported rates had been slowing throughout the year. As reported, in the third fiscal quarter, they rose 4 percent at actual exchange rates to 5.6 billion euros, bolstered by strong demand for jewelry in markets such as Japan, mainland China and North America.
At constant exchange, growth was 8 percent in the three-month period. Overall, growth in the third quarter was slower than in the first six months of the year, when Richemont saw revenue climb 6 percent at actual rates and 12 percent at constant ones.
In a separate statement, Richemont said that Bos will continue to report to Rupert, and will join the senior executive committee. In his new CEO role, Bos will directly and indirectly oversee all the maisons, functions and regions, notably the jewelry maisons, finance and human resources.
During a call following the results, Rupert clarified that Bos will have more responsibilities and reports than the outgoing CEO Jérôme Lambert, who took over in 2018. Lambert will remain on the board and take up the role of chief operating officer, reporting to Bos.
