At its Annual General Meeting held today in Geneva, Richemont announced that its overall sales for the five months ended August 31 increased by 29% at actual exchange rates. At constant exchange rates, sales increased by 35%. The Specialist Watchmakers saw an increase of 34% at constant exchange rates, and 28% at actual exchange rates.
On a region-by-region basis, Asia-Pacific lead the way with increases of 59% at constant rates and 46% at actual rates. The Americas did well with a constant rate increase of 41% and 26% at actual rates.
Retail sales enjoyed a higher momentum than wholesale sales thanks to a good performance in the Maisons’ (brands’) boutiques, the expansion of their retail networks, particularly in the Asia-Pacific region, and strong growth at NET-A-PORTER.
Richemont said that it expects its sales and operating profit for the first six months of this year to be significantly higher than the comparative period.
Based on the strengthening of the Swiss Franc between March 2011 and today, Richemont said the Group will incur a significant translation loss on its cash balances. Further, the accounting gain recognized in the comparative period relating to the acquisition of Net-A-Porter of €101 million will not re-occur. Accordingly, Richemont said it expects attributable profit to be broadly in line with the prior year despite a significantly higher operating profit.
Mr Johann Rupert, Executive Chairman and Group Chief Executive Officer, commented:
“The rest of the financial year is difficult to predict. The problems of fiscal deficits generally and Euro zone difficulties in particular are likely to act as a drag on business prospects for companies in the period ahead, especially if the growth markets are affected. To hope for a continuation of the current good trading levels in such circumstances may be over-optimistic. In addition, we must keep in mind the demanding comparative figures against which sales in the coming six months will be measured.
Moreover, the impact of the Swiss franc’s appreciation against the euro and other major currencies obviously poses a challenge for all Swiss exporters. For Richemont, with a significant production base, our headquarters and many of our Maisons located in Switzerland, the stronger Swiss franc will continue to be negative for our cost of sales and operating expenses, maintaining negative pressure on our margins.
It is reassuring that our Group continues to enjoy a strong financial position: the net cash position at 31 August 2011 was €2.6 billion. The strength of our balance sheet, our continuing cost discipline and the agility of our Maisons means that we will continue to maintain our investment plans and face the foreseeable future with cautious optimism.”