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Richemont Profits Soar 158% in Half

Richemont, which a year ago saw sales and profits plummet from a variety of factors, scored a 158 percent profits spike in its first half.

LONDON — Richemont is riding high.

Compagnie Financière Richemont SA — which a year ago watched its sales and profits plummet due to SARS, the war in Iraq and flagging consumer confidence — is building on recent momentum with a 158 percent spike in profits to 173 million euros, or $225 million, from 67 million euros, or $87 million, in the first half ended Sept. 30.

All figures are converted from the euro at current exchange.

“The speed of recovery has been surprising,” Alan Grieve, director of corporate communications at Richemont, said Thursday. “Of course, we were coming off weak comparisons with the first half last year, but the numbers are still looking good.”

Grieve added: “Cartier is back — substantially back — with new products, and the watch brands we bought in 2000, IWC, Lange & Sohne and Jaeger-LeCoultre, are penetrating new markets, including the U.S. and Japan.”

The gloom and doom of last year’s first half appears to be all but over for the group, which also counts Montblanc, Dunhill and Chloé among its luxury portfolio. Cartier generates the lion’s share of the business.

Sales in the period rose 14 percent to 1.74 billion euros, or $2.26 billion, from 1.53 billion euros, or $2 billion, with growth across all product categories and regions. Troubled businesses Dunhill and Lancel, although still not profitable, are both on the road to recovery through better products and more focused marketing, Grieve said, adding he expects Lancel in particular to be profitable within 18 months.

Meanwhile, sales in the second half, which began in October, have so far grown at a rate of 8 percent. Grieve said it was reasonable to anticipate “high-single-digit growth” during the rest of the six-month period. He added the group also was expecting a strong, pre-Christmas season.

Sales in the Asia-Pacific rose 30 percent to 360 million euros, or $468 million, from 276 million euros, or $359 million, while sales in Japan rose 7 percent to 300 million euros, or $390 million, from 281 million euros, or $365 million. Grieve said the firm was focused on entry-level products and gifts in order to further stimulate sales in Japan.

This story first appeared in the November 19, 2004 issue of WWD.  Subscribe Today.

In the Americas, sales rose 15 percent to 344 million euros, or $447 million, from 298 million euros, or $387 million. Richemont said it was riding the wave of consumer confidence in the U.S. Cartier watches, in particular, exceeded expectations in that market, generating growth of some 26 percent at historic rates.

In Europe, sales rose 10 percent to 735 million euros, or $956 million, from 671 million euros, or $872 million, partially due to an uptick in tourist demand.

By product category, sales at specialist watchmakers grew 18 percent to 431 million euros, or $560 million, from 366 million euros, or $476 million, while sales at Richemont’s writing instrument manufacturers rose 17 percent to 186 million euros, or $242 million, from 159 million euros, or $207 million.

Sales at the jewelry houses rose 11 percent to 922 million euros, or $1.2 billion, from 827 million euros, or $1.1 billion. The statement said Cartier especially benefited from launches within the Santos watch range and the Panthere jewelry range.

Sales at Richemont’s leather and accessories divisions rose 4 percent to 118 million euros, or $153 million, from 113 million euros, or $147 million, while sales at the other businesses — including Chloé, Hackett, Purdey and Old England — rose 34 percent to 82 million euros, or $107 million, from 61 million euros, or $79 million.