By  on May 25, 2007

LONDON — Richemont has big plans for Chloé — and no interest in acquisitions at any price.

Norbert Platt, chief executive officer of Compagnie Financière Richemont SA, said Thursday the luxury goods group sees potential to expand Chloé into watches and jewelry. While Platt gave no time frame for the move, the brand extension follows the addition of categories such as leather goods, sunglasses, the See by Chloé secondary line and freestanding Chloé stores.

However, during a conference call to discuss the group's year-end results, Platt was also crystal clear regarding Richemont's acquisition intentions, saying the group would not compete with shopaholic equity funds for fashion and luxury brands. Asked about the recent sale of Valentino Fashion Group to the equity fund Permira, Platt said: "The Valentino acquisition was extremely expensive, and the question is whether Permira can add enough value to Valentino in order to make their money back. Faced with an acquisition, we ask ourselves if the price is in proportion to the added value of the business."

During the call, Richard Lepeu, group finance director of Richemont, added that, instead of paying premium rates for an acquisition, Richemont is focused on growing organically. He said the company either will start up businesses like it has recently done with Polo Ralph Lauren, creating a 50-50 joint venture for luxury watches, or build out existing businesses such as Chloé.

The comments were made as Richemont reported a 21 percent increase in net profits to 1.3 billion euros, or $1.67 billion, in the year ended March 31, from 1.1 billion euros, or $1.34 billion, a year earlier. The strong growth in profits came as a result of vigorous sales of jewelry and watches.

Overall sales rose 12 percent to 4.83 billion euros, or $6.19 billion, from 4.31 billion euros, or $5.25 billion.

Stripping out annual gains from British American Tobacco, where Richemont has a 19 percent stake, profit growth at the company would have been 29 percent to 789 million euros, or $1.01 billion, from 610 million euros, or $742.9 million. Currency conversions were made at average exchange rates for the respective periods.

In a statement Thursday, executive chairman Johann Rupert called the year's performance "excellent," adding that the global market for luxury goods is expanding and the outlook for the year is positive.

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