LONDON – A growing appetite for fine jewelry and watches fueled a 19 percent uptick in sales at Compagnie Financière Richemont in fiscal 2023 to nearly 20 billion euros, and record profit from continuing operations.
On Friday, Richemont reported sales of 19.95 billion euros, bolstered by double-digit gains in all product categories, and strong growth across all regions. At constant exchange, growth was 14 percent.
Profit for the year from continuing operations rose 60 percent to 3.91 billion euros, which Richemont described as a record high.
Reported profit for the year declined 86 percent to 301 million euros due to the impact of discontinued operations and a non-cash charge of 3.4 billion euros related to the planned transfer of the assets of Yoox Net-a-porter Group to Farfetch.
In a statement, Richemont chairman Johann Rupert trumpeted “excellent results for the financial year, with all business areas generating higher sales and profits. The group has drawn on the strength of its maisons and the resilience of luxury consumers in an environment characterized by geopolitical volatility, economic uncertainty and high inflation.”
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Looking ahead, Rupert added that economic volatility and political uncertainty “look set to remain features of the trading environment.”
He said that Richemont would “seek to maintain the necessary agility to manage fluctuating levels of demand. I am confident that our maisons are well positioned to meet strong demand, notably driven by a significant resumption of Chinese travel.”
During a call with analysts later on Friday morning Rupert spoke at length about the impact of interest rate rises on the U.S. economy and consumer sentiment.
He said the U.S. Federal Reserve Board had been “reckless” in raising rates so rapidly and frequently over the past year, especially after such a long spell of liquidity and cheap credit in the markets. Over the past 12 months the Fed has raised rates at the fastest pace for 40 years.
Although Richemont’s sales in the Americas region grew by 27 percent at actual rates and by 14 percent at constant exchange in fiscal 2023, Rupert said there will be a slowdown in growth this year.
Looking ahead, he said, the U.S. “will not be as buoyant as a year ago.” He believes the U.S. market began slowing down last November, and is expecting a “harder landing than hoped for” in the region, generally speaking.
He also talked about the importance of preserving the equity and desirability of the Richemont brands. He said the advertising scandals that recently engulfed Balenciaga and Bud Lite “would have never occurred at Richemont. We want to stay true to our culture, to grow and preserve brand equity.”
Rupert reiterated that he is not selling Richemont or Cartier, and that he never received a direct approach from Bernard Arnault, founder, chairman and CEO of LVMH Moët Hennessy Louis Vuitton, contrary to media reports.
On Friday, the company also launched a share buyback program and nominated two new directors to the board, Fiona Druckenmiller and Bram Schot.
Druckenmiller is the founder of FD Gallery, a New York-based boutique that offers pre-owned luxury items, predominantly vintage and contemporary jewelry. She has a decade of experience in the finance industry, latterly as a portfolio manager at the Dreyfus Corporation.
Rupert said that Druckenmiller’s “jewelry expertise, understanding of the American clientele and social and environmental causes will be of great value to the board,” while Schot brings “more than three decades of experience in the premium automotive industry and a deep understanding of risk management, supply chain and sustainability issues.”
Richemont shares were up 5.3 percent at 157.4 Swiss francs in morning trading on Friday, May 12.
