Richemont's sales drop 4% and profits 44%

Swiss luxury group Richemont reported a drop in sales of 4 percent to $6.3 billion (EUR 5.2 billion). Profits fell 44 percent to $732 million (EUR 600 million). The only region to register growth was Asia-Pacific, with sales up 17 percent. Revenue in Europe dropped 11 percent, sales were down 20 percent in the Americas, and revenue slid 5 percent in Japan. In April the company acquired a majority in Net-a-Porter but stated the acquisition would not affect its cash flow for its year-end.

Following a period of record levels of profitability until 30 September 2008, Richemont was affected by the difficult trading environment from October 2008 onwards. As a consequence, full year sales were down 4 per cent versus a year ago. During the first half of the year under review, wholesale sales in those regions most affected by the financial crisis, particularly the Americas and Europe, were particularly depressed as trade partners sought to reduce their inventory levels. Sales through the Group’s own boutique network were generally more resilient. Consequently, sales in the first six months of the year were 15 per cent lower. During the second six months of the year under review, whilst trading conditions remained challenging, sales were 7 per cent higher: in the comparative period of fiscal 2009, sales were 5 per cent lower.

Johann Rupert, Executive Chairman and Chief Executive Officer of Richemont said: “Richemont has weathered the economic crisis to date and is in a strong financial position. Our businesses reacted quickly and positively to the downturn in demand and have grown market share. On behalf of shareholders, I would like to thank all of Richemont's employees, around the world, for the commitment and dedication that they have shown to the Group during these difficult times. We are ready to capitalise on growth opportunities in new markets and to meet demand in established markets once the economic situation improves. Key drivers of the Group's future success will be innovation and creativity, which have always been hallmarks of the Maisons. There will still be plenty of challenges ahead but I am confident that Richemont's Maisons will surmount
them.”

Image: Net-a-Porter's Nathalie Massenet