Online sales boost Richemont’s third-quarter results
The acquisition of e-retailers YNAP and Watchfinder pays off, lifting sales by 25%
The latest earnings of Swiss-based luxury brands group Richemont, which is controlled by the Stellenbosch-based Rupert family, were significantly boosted by its acquisition of online retailers YOOX Net-a-Porter (YNAP) and Watchfinder.
The group, which owns the Cartier and Van Cleef & Arpels brands, said YNAP’s contribution was the main reason sales were up 25% to €3.91bn for the third quarter to end-December.
The acquisition of YNAP and Watchfinder has been part of Richemont’s move into e-retail, which it sees as key to capturing millennial customers. Prior to the acquisition of YNAP, the group’s online sales only contributed 1% to total sales.
Richemont already had a 49% stake in YNAP when it bought out the 51% holding it did not yet own for €2.69bn in March 2018.
The contribution of Richemont’s online operation offset somewhat sluggish retail sales, which were only up 7% to €2bn, compare with the surge from €59m to €694m in online sales.
The group said its European retail operations were “affected by social unrest in France which negatively impacted tourism and led to store closures for six consecutive Saturdays”.
The contribution coming from YNAP and Watchfinder have made a significant contribution to total sales for the nine-month period to end-December, which were up 23%. Excluding YNAP and Watchfinder, sales for the period only increased 6%.
When measured by region, quarterly sales were up across all regions except the Middle East and Africa, and Europe. Richemont blamed “unfavourable currency movements and a strong basis of comparison” for a 13% decrease in sales in the Middle East and Africa.
The group’s efforts in Asia Pacific paid off, resulting in a double-digit sales growth in China. Sales in Hong Kong however, slowed, mostly as a result of the strength of the Hong Kong dollar against the Renminbi, dampening tourist spending.
Besides investing in online retail, the group is also focusing a large part of its operations on the Chinese market. Last year, it announced a partnership with Chinese e-commerce giant Alibaba.
Sales increased 7% in Japan and were up 9% in the Americas.