Double digit growth?
That is surprising. Unsustainable?
Love the headline BTW.
http://www.watchpro.com/breaking-new...it-plunges-46/BREAKING NEWS: Richemont share price crashes as profit plunges 46%
Shares in Richemont Group plunged by 6% in early trading today as the group reported an annual fall in revenue and profit.
The Swiss luxury jewellery and watch company reported a 4% drop in sales from €11 billion in its 2016 financial year to €10.65 billion for the 12 months ended on March 31 this year.
Annual profit almost halved from €2.23 billion to €1.2 billion.
Half of the drop in profit was accounted for by a one-off charge associated with the merger of Net-A-Porter with Yoox in 2015.
Excluding this exceptional item, net profit would have dropped 24%, the company said.
“The past year posed challenges for Richemont. The Group responded to changes in demand, which particularly affected our watch business, and shifting patterns of consumption,” said Johann Rupert, chairman of Richemont.
Europe was the worst-performing region for Richemont, with sales down 9%. Results in France and Switzerland were even worse, but the UK was singled out as the only bright spot. “The United Kingdom enjoyed a double digit growth rate in sales following the EU referendum,” the financial report states.
Over 60% of world-wide Richemont sales come from 1117 directly operated boutiques and online stores, up from 55% in FY 2016.
The past six months has seen a purge of the senior management team, including chief executive Richard Lepeu, who retired in March, and chief financial officer Gary Saage, who will leave in July.
Richemont has also replaced several chief executives for its maisons, and promoted George Kern to oversee all watchmaking businesses.
Richemont’s new senior management team comprises Mr Kern, who is also responsible for digital and marketing, and Jérôme Lambert, who has responsibility for the Richemont regional platforms and services and for our other businesses other than Cartier, Van Cleef & Arpels and the specialist watchmakers.
They both took up their new roles formally at the beginning of April.
Double digit growth?
That is surprising. Unsustainable?
Love the headline BTW.
Double digit growth at the cost of the double digit depreciation of the GBP.
UK performance boosted by Brexit pound crash, it's a temporary blip, once prices adjust I imagine the UK will follow the trend in decreasing sales/profits. Perhaps Omega needs to release a few more limited edition Speedmasters to spur on growth
Seriously though, with the economy the way it is I wonder how much of a market there is for mid range watches like Omega. Rolex has most of the mid range segment imho as it has much better brand awareness than Omega, the average joe who may consider a fancy watch probably thinks of Rolex or 'gasp' Tag Heuer. You can't solely sustain your profits on WIS like us, saying that they still make a nice profit, however when you are a publicly traded company you have to keep those profits going up or your shareholders get angry. Maybe they should go private like Rolex is and just concentrate on making a good product and not worrying about shareholders.
Last edited by Alansmithee; 12th May 2017 at 14:04.
Is it just me or does it actually not sound that bad?
Ofcourse the UK growth is a currency thing, it will readjust or is adjusting as we speak.
But on the hand, it seems without the merger with net-a-porter they didnt lose that much? And the acq of net-a-porter is a very strong move i feel as they are doing excellently.
In any other retail business, if you have an over-supply of anything there comes a point where one says: Ok, we can't move this stock, let's just flog it off for cheap just to move it on. It's called a sale and you shift stuff at the lowest possible margin.
But no, not the watch business, where such a move would be perceived as negative for the exclusivity of a brand.
What on earth do they do with all that extra stock that doesn't move?? Where does it go?
They bought back large quantities of stock from mostly Far East dealers and most likely smelted/binned the cases and put the movements into storage to be used another day. Cartier pieces made up a fair chunk of the buy-back.
I was told the amount but can't remember for sure but 20million rings a bell!?
I have read a few reports from analysts that the big brands are all reporting poor sales, mainly because their biggest market (China) has bad a major slow down and shift in buying habits. Since Brexit and the drop in the pound most Asian consumers have been buying goods in the UK and claiming VAT back when leaving making a big saving. Will be interesting to see what happens over the next 6 to 12 months. I suspect we will see a lot more profit warnings.
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Also interesting that boutique sales are up by so much meaning margins must be up to.
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Richemont exec falls on his sword:
https://www.hodinkee.com/articles/ri...ve-immediately
He'd only been in the job for four months so I'd suggest unrelated.
But they still made over a billion in profit!