(BFM Bourse) – Despite record sales, the luxury giant Richemont fell on the stock market, the profitability displayed by the group having disappointed. Management has also shown itself to be cautious for the year which is beginning in the face of an “unstable” global environment. The poor form of Richemont on the stock market carries in its fall the values of the Parisian luxury compartment like LVMH or Hermès.
The Swiss luxury giant Richemont tumbled on the stock market on Friday, the record results announced at the end of a prosperous year for jewelry and watchmaking having been unable to compensate for disappointing profitability and the lack of progress in its projects with Farfetch. The action fell 13% to 91.76 Swiss francs while the SMI, the benchmark index of the Swiss Stock Exchange, rebounded 0.5%, around 4:15 p.m.
French heavyweights LVMH (-1.65% to 559.10 euros) and Hermès (-1.23% to 1,042 euros) were down, after the results of the Swiss luxury giant Richemont: the owner of the Cartier jewelry house reported an operating surplus below analysts’ forecasts, according to Bloomberg. Kering is doing better with a title almost in balance at 453.70 euros, around 4:15 p.m.
For its staggered 2021/2022 financial year (ended at the end of March), the group that owns the Cartier jewelry house reported a 61% jump in its net profit, to 2 billion euros, and 46% in its annual turnover, at more than 19.1 billion euros, thanks to the very strong rebound in demand for luxury products after the initial shock of the pandemic.
Its sales soared both in jewelry, up 47% excluding currency effects, in watchmaking (+50%) or in fashion and accessories (+51%), the group also said in a press release. owner of the IWC and Piaget watch brands, the Chloé fashion label and Montblanc pens.
Net profit below expectations
But if its turnover exceeded forecasts, its net profit fell well below expectations, the recovery in the luxury sector having also been accompanied by a sharp increase in its expenditure, in particular on marketing. and communication. Its operating expenses increased by 35%, among other things under the effect of the costs generated by the return of events that had been canceled during the pandemic, such as the Geneva watch fair.
By comparison, analysts polled by the Swiss agency AWP expected an average of 18.9 billion euros in turnover but 2.7 billion in profit.
“Sales were better than expected, which is a surprise given everything that is happening, between the Russian invasion and the confinements in China”, reacted Jon Cox, analyst at Kepler Cheuvreux in an email to the AFP. He sees it as a sign of “resilience” of Richemont’s activities. “However, profitability was weaker than expected,” noted the analyst, who also notes the lack of progress, as many had hoped, in his e-commerce projects with the luxury goods distribution platform. online Farfetch.
Stalling talks with Farfetch
In November, Richemont said it was in discussions with Farfetch to offer it to become a minority shareholder in Yoox Net-A-Porter, which combines its online distribution activities, in order to create a neutral platform in luxury. Richemont then said he hoped that other players in the sector would follow suit and would also take a stake.
But in the press release accompanying its annual results, the group indicated that the discussions “are continuing”, explaining that “in such an eminently complex field, the processes can only be slow”. These stalled discussions will “weigh like a sword of Damocles” reacted Jean-Philippe Bertschy, analyst at Vontobel in a stock commentary, noting that the lower than expected profitability does not help either at a time when luxury stocks are “bombed”.
Between the war in Ukraine and the confinements in China, investors are nervous for listed luxury stocks. Some “40% of stores in China” are currently closed, Chief Financial Officer Burkhart Grund said in a conference call. In its accounts, the group also indicated that the suspension of its activities in Russia had a negative impact of 168 million euros on its operating result.
Despite a strong increase in sales over the past year, the group’s president Johann Rupert has shown himself to be cautious for the financial year which is beginning in the face of an “unstable” global environment.
(With AFP)
©2022 BFM Bourse
Are you following this action?
Receive all the information about LVMH in real time: