Swiss luxury goods conglomerate Richemont, led by South Africa’s richest man Johann Rupert, disclosed a first-half financial report for the 2024 fiscal year, revealing earnings growth that fell short of both investor and analyst expectations.
The Rupert-led conglomerate, celebrated for its premium brands such as Cartier, Chloe, Dunhill, Alaa, and Delvaux, posted a modest 3 percent increase in profits, rising from €2.1 billion ($2.24 billion) in the first half of its 2023 fiscal year to €2.16 billion ($2.31 billion) in the corresponding period of its 2024 fiscal year.
The group’s sales also saw a single-digit 6 percent increase, climbing from €9.68 billion ($10.35 billion) to €10.22 billion ($10.92 billion). However, this growth failed to meet analysts’ forecasts, as inflationary pressure and geopolitical tensions impacted global economic growth and consumer spending.
Asia Pacific drives growth despite inflation & geopolitical pressures; Americas lag behind
Sales in all regions, excluding the Americas, experienced growth at actual exchange rates. The Asia-Pacific region emerged as a leader with a 14-percent increase in sales, fueled by a 23 percent increase in mainland China, Hong Kong, and Macau combined. The removal of Covid-related restrictions and the resumption of travel at the beginning of the year contributed to this surge.
The group’s directly-operated store network recorded the highest growth rate at nine percent, now constituting 69 percent of total sales. The Jewellery Maisons played a pivotal role in the six-percent overall sales increase, with a notable 10 percent growth, while sales at the Specialist Watchmakers experienced a three-percent dip.
The “Other” business area, including Watchfinder, faced a one-percent decline, and sales at the fashion and accessories maisons remained in line with the prior-year period. However, discontinued operations, including YNAP, recorded a significant 13 percent contraction in sales.
Chairman Johann Rupert expresses optimism despite economic headwinds
Despite the challenges faced in the first half, Richemont’s chairman, Johann Rupert, remains optimistic about the second half. Commenting on the half-year financial performance, Rupert acknowledged the impact of inflationary pressure, slowing economic growth, and geopolitical tensions on customer sentiment.
Rupert noted a broad-based normalization of market growth expectations across the industry but expressed confidence in the group’s resilience.
Richemont’s focus on enhancing the desirability of its Maisons, promoting direct-to-client engagement, nurturing domestic clientele, and reinforcing operational agility and excellence will strengthen the group’s position. With the peak festive season sales falling in the second half of its financial year, the conglomerate anticipates a positive turnaround in the coming months.
