LONDON — It was a tale of two very different quarters at Compagnie Financière Richemont, which saw sales decline 26 percent at actual exchange rates to 5.48 billion euros, and profits fall 82 percent to 159 million euros, in the first half of the year ended Sept. 30.
Richemont, owner of brands including Cartier, Dunhill, IWC and Van Cleef & Arpels, said Friday that first-quarter sales were down 47 percent, but they recovered quickly as the months progressed. In the second quarter, sales were down by 5 percent at actual rates, and 2 percent at constant ones.
In the six months, China bolstered Richemont’s performance, with sales in the region up 78 percent at actual rates. That growth was able to mitigate the overall decline in Asia-Pacific of 6 percent in the period and a 44 percent decline in Europe. Richemont said that China has now overcome the U.S. as the group’s largest market. The U.S. saw a 33 percent decline in sales.
Jewelry also outperformed the other categories. Richemont said that in the six months sales at its jewelry maisons were 18 percent lower than in the comparative period. Following a drop of 41 percent for the first quarter of the financial year, sales returned to positive territory, with 4 percent growth in the second quarter.
The company’s chairman Johann Rupert said that throughout the first six months of the financial year, the COVID-19 pandemic impacted trading and operations “with unprecedented levels” of disruption.
“All regions, channels and business areas were affected, notwithstanding a 78 percent increase in China versus the prior-year period at actual exchange rates,” Rupert said, adding that a “strong presence in China and an acceleration in digital initiatives have partially mitigated the consequences of temporary store closures and a halt in tourism worldwide.”
He said that Richemont’s maisons were “swift to build on past investments in digital infrastructure and maintain direct engagement with clients,” prompting online sales to growing at a triple-digit rate. “Our efforts to improve the quality of our distribution networks and inventories at our multibrand retail partners also helped lessen some of the negative impacts of the pandemic.”
As reported on Thursday, Richemont has entered into a landmark mega-deal with its China partner Alibaba, and with Farfetch, to accelerate growth in that market. The new venture also has support from Artemis, an investment vehicle owned by the Pinault family.