Swiss luxury group Richemont, which owns renowned brands like Cartier, Chloé, and Van Cleef & Arpels, has recently reported a significant net loss of €766 million in the first half of this year. This is a significant contrast to the €1.2 billion profit that the company earned during the same period last year. The main reason behind this unexpected loss is the sale of Richemont’s online sales activities.
In an official statement, Richemont shared its financial results for the first six months of 2022, revealing the substantial net loss of €766 million. This loss can primarily be attributed to the discontinuation of the company’s online sales operations. Last August, Richemont announced its decision to sell a portion of its stake in Yoox – Net A Porter to Farfetch, transferring 47.5% of shares to Farfetch and 3.2% to businessman Mohamed Alabbar. However, this transaction is accompanied by a value adjustment of €2.7 billion in Richemont’s accounts, as indicated in the statement.
The purpose of this initiative is to enhance the Yoox – Net A Porter platforms. During the period from April to June, Richemont’s online distribution activity only experienced a modest growth rate of 2% at constant rates. To optimize the “route-to-market” and realize their vision of Luxury New Retail, CEO Johann Rupert mentioned in the November 11 statement that the initial phase of the transaction is expected to be completed by the end of 2023, at which time Richemont’s subsidiary brands will adopt Farfetch’s technology.
Despite the setback in online sales, Richemont’s fashion and accessories division has shown strong growth. According to the recently released figures, the group’s revenue surged by 24% to exceed €9.6 billion for the period ranging from April to September.
Among the various sectors, the most significant increase was observed in the Fashion and Accessories division, with sales rising by 27%. Notably, brands like Chloé, Montblanc, and Peter Millar (including G/FORE) made notable contributions to the overall revenue growth. Additionally, the Jewelry and Watches segments remained formidable as well, with growth rates of 24% and 22% respectively.
Overall, while Richemont faced a substantial loss due to the sale of its online sales operations, its fashion and accessories division thrived in the first half of this year. The company’s strategic collaboration with Farfetch and focus on luxury retail aspirations are indicative of its commitment to adapting to the evolving marketplace.
Useful links:
– Reuters: Richemont Returns to Profit Growth
– Farfetch: Strategic Partnership with Richemont
