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LUXURY

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.

LUXURY

Geneva: rare pink diamond aims to make $50 million

The Pink Legacy, an exceptionally large pink diamond, is set to go under the hammer at Christie's in Geneva on Tuesday, when it is expected to bring in up to $50 million.

Geneva: rare pink diamond aims to make $50 million
Christie's have refused to say who the current owner of the Pink Legacy is. Photo: AFP

At nearly 19 carats, the vividly coloured gem is extraordinary, Jean-Marc Lunel, an international jewellery specialist at Christie's, told AFP.

“If you consider that most pink diamonds weigh less than a carat, it is really something,” he said.

Read also: Marie Antoinette's exquisite jewels up for auction in Geneva

The gem, which on November 13th will be offered at auction for the first time, has been estimated at between $30 million and $50 million (€26.5-€44.1 million), and Lunel suggested it could hit the high end of that range.

“It is probably the most beautiful (specimen) ever presented at public auction,” he said, insisting there was good reason to expect the rock to snatch an extraordinary price.

The Pink Legacy is said to have been discovered in a South African mine around a century ago. Photo: AFP

The rectangular-cut diamond has been graded “fancy vivid” – the highest possible grade of colour intensity.

Christie's pointed out that in the salesroom, fancy vivid pink diamonds over 10 carats are “virtually unheard of” and that only four vivid pink diamonds or over 10 carats have ever been offered for sale at auction.

One of them, the nearly 15-carat Pink Promise, was sold last November at a Christie's auction in Hong Kong for $32.5 million. That amounts to $2.176 million per carat, which remains the world auction record price per carat for any pink diamond.

And in 2013, a huge pink diamond weighing 59.60 carats meanwhile went under the hammer at Sotheby's for $83 million, or $1.39 million per carat.

The Pink Legacy, set to headline Christie's annual Magnificent Jewels auction on Tuesday, used to belong to the Oppenheimer family, which for decades ran the De Beers diamond mining company, but Christie's refused to say who the current owner was.

It was discovered in a South African mine around a century ago, Lunel said.

“It was probably cut in the 1920s,” he said, adding that it had not been altered since.

The classic rectangular cut is traditionally used for white stones, but is rare for pink diamonds.

“Imagine a domino that you have cut the corners off of,” Lunel said, pointing out that the cut is a “classical so-called emerald cut”, which stands out from the typical, more rounded, multi-facetted cuts used today.

Rahul Kadakia, Christie's international head of jewellery, meanwhile said in a statement in September that he expected The Pink Legacy to “cause immense excitement with collectors and connoisseurs of diamonds around the world”.

“Its exceptional provenance will no doubt propel it into a class of its own as one of the world's greatest diamonds.”