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Nov 11, 2022
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Richemont strong as fashion shines, despite big YNAP-linked loss

Nov 11, 2022

Luxury giant Richemont’s half-year figures on Friday showed that the six months to the end of September were strong as it reported sales and operating profit from continuing operations of €9.7 billion and €2.7 billion, respectively, and good results in its fashion ops. It remained cautious due to the volatile backdrop but is confident about its business going forward.

Chloe - Fall-Winter2022 - Womenswear - Paris - © PixelFormula

Those figures represented a 24% year-on-year sales increase at actual exchange rates and a 27% jump in gross profit as the gross margin rose by 140 bps to 68.9%.

It meant operating profit was up 26% at €2.7 billion, although the company made a net loss for the period of €766 million compared to a profit the year before of €1.24 billion.

This was because of the writedown from the YNAP discontinued operation of €2.87 billion, compared to a similar loss in the previous year of €254 million.

YNAP is recorded as a discontinued operation after Richemont reached an agreement with Farfetch and Alabbar to sell a controlling interest in the business to create a neutral industry-wide platform. It had previously flagged the major loss.

Without YNAP, the profit from continuing operations would have been €2.1 billion compared to €1.5 billion in the previous year.

But the overall group sales picture clearly looked strong and even though the rise at constant exchange rates (CER) was less than the 24% actual increase, at 16% the CER figure was still good.

The company said it saw double-digit increases at actual exchange rates across all business areas and channels with “improved momentum” in Asia Pacific where sales were up 3%. It enjoyed double-digit increases in all other regions.

Growth momentum was led by retail, up 30%, or 21% CER, representing 67% of group sales.


The improved operating margin of 28.1% was driven by its Jewellery Maisons (including Cartier and Van Cleef & Arpels) achieving 24% sales growth (+16% CER) and delivering a 37.1% operating margin. Meanwhile, Specialist Watchmakers (including Baume & Mercier, Piaget, and Vacheron Constantin) grew sales by 22% (+13% CER) and achieved a 24.8% operating margin.

Importantly too, its ‘Other’ business area (predominantly fashion and accessories labels) grew 27% (+19% CER) and generated a 4.3% operating margin.

Those businesses include major luxury labels, such as Alaïa, AZ Factory, Chloé, Delvaux, Peter Millar, Montblanc, and Dunhill, among others, as well as now also including Watchfinder.

This division hasn't always been the star performer for the group, but this time, it saw the highest growth rate, although the highest profitability was seen in the jewellery operation.

AZ Factory - Spring-Summer2023 - Womenswear - Paris - © PixelFormula

The Other segment saw improved profitability though, at €56 million, with Richemont saying that Chloé, Montblanc and Peter Millar (including G/Fore) contributed most to the sales increase. Delvaux generated the sharpest growth rate in sales and it added that “we are carefully nurturing this promising Maison for the long term”.

We didn’t get any specific details about the performance at the YNAP operation that owns Yoox, Net-A-Porter, Mr Porter, and The Outnet as well as operating a number of online flagship stores for brands.

As mentioned, the company announced earlier this year that Farfetch and Alabbar will acquire 47.5% and 3.2% of YNAP, respectively, leaving Richemont holding 49.3%. YNAP will be a neutral industry-wide platform, with no controlling shareholder. In exchange, Richemont will receive Farfetch shares, expected to represent 12%-13% of Farfetch’s issued share capital, “to further align interests”.

Subject to a number of conditions, the initial stage of the transaction is expected to complete before the end of calendar year 2023. 

By that point, Richemont Maisons will also adopt Farfetch's tech “to create the best ‘route to market’ and realise their ‘Luxury New Retail’ vision. We will strive to achieve efficiency, flexibility and speed in addressing our clients’ needs, getting our products to the right place, at the right time, in a seamless manner. Meanwhile, YNAP will adopt Farfetch Platform Solutions to accelerate the shift towards a hybrid model that will significantly enhance its prospects”.

The group made one final announcement on Friday saying that Richemont’s Chief People Officer and CEO of Regions, Patricia Gandji, is joining the Senior Executive Committee. She’ll continue to report to CEO Jérôme Lambert.

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