Richemont brands sale mooted after resignation

Swiss luxury goods giant Richemont said on Tuesday that a top executive had resigned, amid expectations the group that owns Cartier, Piaget and Montblanc will sell off under-performing brands.

Richemont brands sale mooted after resignation
Photo: Richemont

Marty Wikstrom, who had headed the fashion and accessories division since 2009, would step down "with immediate effect", the world's second-biggest luxury goods group said, though she would maintain her position on the Richemont board until the next general assembly on September 12th.
The Geneva/based group did not, however, explain Wikstrom's departure or say who would 
replace her.
Richemont rakes in more than three quarters of its sales from its jewellery 
and watch divisions, but is also present in the fashion and leather-goods sectors with brands such as Alfred Dunhill, Azzedine Alaia and Lancel and Chloe.
The group does not provide detailed results for this segment, but said when 
it presented its earnings for its 2012-2013 financial year that its fashion and accessories' operating profit for the period had not grown as much as a year earlier.
"The Fashion and Accessories Maisons grew in the mid-single digits, 
reflecting challenging conditions in their major markets," company chairman Johann Rupert acknowledged in the earnings report.
Jon Cox, an analyst with Kepler Cheuvreux, said the company wanted to see a 
quicker return on investment.
This, Cox said in an email, appeared to be "code that problem units will 
either have to sort themselves out or be disposed."
Men's fashion group Dunhill and French leather-goods brand Lancel have for 
instance been struggling for the past decade and have never reached profitability levels seen by their peers, he said.
"I presume the company has decided the brands are in the last chance saloon 
and I wouldn't be surprised to see a divestment," he said, estimating that Richemont could probably pocket between 600 and 800 million euros by selling them.
At the beginning of May, the Swiss group also announced changes at the head 
of Montblanc, which is most known for its luxury pens but which also makes jewellery and watches.
"On Montblanc, it is a similar situation regarding growth and profitability 
over the last few years," Cox said, though "I would be more surprised to see that brand disposed."
Following the news, Richemont saw its share price rise 1.1 percent to 91.10 f
rancs in afternoon trading on a Swiss stock exchange index down 0.28 percent.

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Swiss luxury giant Richemont sees profits halved on watch woes

Swiss luxury goods giant Richemont said Friday its full-year net profit was nearly cut in two as sales of high-end watches ticked lower.

Swiss luxury giant Richemont sees profits halved on watch woes
File photo: Richard Juilliart/AFP

Richemont, second only to France's LVMH in the luxury world, posted a net profit of 1.2 billion euros during its 2016/2017 fiscal year — down 46 percent from a year earlier.

Its sales meanwhile slumped to 10.6 billion euros, down from 11 billion during the previous 12-month period.

A drop in profits had been expected, since the results the company announced a year ago were padded with 639 million euros from the merger of its online sales platform Net-a-Porter and an Italian counterpart, Yoox.

But the fall was steeper than expected, with analysts polled by Swiss financial news agency AWP expecting the company to post a net profit of 1.3 billion euros on sales of 10.7 billion.

“The past year posed challenges for Richemont,” company chairman Johann Rupert acknowledged in a statement, pointing especially to “changes in demand, which particularly affected our watch businesses”.

The luxury watch sector has seen tough times since Chinese authorities banned giving expensive gifts as part of an anti-corruption crackdown in 2013, followed by democracy protests in 2014 hitting sales in Hong Kong.

READ ALSO: Why a Swiss company created a watch made from cheese

Faced with dwindling demand, Richemont has cut staff and also repurchased inventory from shops to help them remove models struggling to find buyers from display cases and make room for new collections.

The company, which owns top global brands such as Jaeger LeCoultre, Van Cleef & Arpels and IWC, saw its watch sales slump 11 percent during the past fiscal year, which ended on March 31st.

Its operating margin meanwhile was more than halved to 7.8 percent due to its repurchasing of inventory and efforts to scale back its production capacity.

Following the announcement, Richemont saw its share price drop 4.15 percent to 81.75 Swiss francs (75 euros) a piece in early afternoon trading, as the Swiss stock exchange's main SMI index inched up 0.23 percent.