Richemont Full-Year Profit Doubles as Jewelry Sales Climb

Geneva—Luxury titan Richemont reported double-digit sales growth in the US and China in its annual results, buoyed by a strong performance from the jewelry sector.

Overall sales totaled €13.99 billion ($15.63 billion), a 27 percent increase compared with €11.01 billion ($12.30 billion) a year ago.

Net profit more than doubled to €2.79 billion ($3.12 billion), including €1.38 billion ($1.54 billion) stemming from its recent acquisition of e-tailer Yoox Net-A-Porter Group (YNAP) and pre-owned watch platform Watchfinder.

Sales in its jewelry division, which includes Cartier and Van Cleef & Arpels, were up 10 percent at constant exchange rates to €7.08 billion ($7.91 billion) compared with €6.45 billion ($7.20 billion) last year.

The division’s operating results rose 16 percent to €2.22 billion ($2.48 billion) while its operating margin improved 160 basis points to more than 31 percent.

Richemont CFO Burkhart Grund attributed the strong results to “higher sales, manufacturing efficiency gains, relatively favorable Swiss franc, and good cost control, which more than offset investments in retail and communication.”

Jewelry sales were strong in all regions and in all channels, accounting for 51 percent of group sales, said Grund during the earnings call.

Evergreen collections, including “Love” and “Juste un Clou” by Cartier and “Alhambra” and “Perlée” by Van Cleef & Arpels, were strong performers. New collections, like “Galaxies” by Cartier and “Frivole” by Van Cleef & Arpels, held their own as well.

Sales in its specialist watchmakers division, which includes A. Lange & Söhne and IWC Schaffhausen, were up 10 percent at constant exchange rates to €2.98 billion ($3.33 billion) compared with €2.71 billion ($3.03 billion) a year ago.

Growth was “broad-based across the collections,” said Grund, with the launch of “Santos de Cartier” and “Poetic Complications” by Van Cleef & Arpels performing especially well.

The division’s operating results rose 44 percent to €378 million ($422 million), but its operating margin was 12.7 percent.

Although an improvement from the previous year, analysts expressed concern about the watch division’s weak profitability.

“Profitability still seems to be lagging especially in the specialist watchmaker division,” said Exane BNP Paribas analyst Melania Grippo to Reuters.

“I think, if you look at just the reported numbers, I think that the performance at the specialist watchmakers is underappreciated,” said Grund during the earnings call, pointing to double-digit growth in the retail network.

Another cause for concern was the operating loss of €264 million ($295