Richemont not to sell any of its brands in the short to mid-term
After intense speculation earlier this week, Richemont Group has firmly affirmed it will not sell any of its 20 brands and said it is being cautious because the environment is “subdued.” Richemont expects to get bigger returns by investing more in units such as Montblanc, CFO Gary Saage said on a call with reporters. Montblanc’s new head Jerome Lambert plans to change the maker of pens, watches and accessories into a “more accessible” luxury brand.
The company’s decision to review its brands in May sparked speculation that it could break up its fashion and leather-goods unit. The only brand Richemont was considering strategic options for was Lancel, and the luxury-goods maker has decided to keep the leather-bag maker rather than sell it, Mr. Saage said today.
Currency swings will weigh on second-half earnings after operating profit dropped 0.7% to EUR 1.37-B ($1.8-B in the 6months through September, the Geneva-based company said Friday in a statement.
“The subdued overall environment and in particular our continued investments for the long-term call for increased caution,” Chairman Yves-Andre Istel said in the statement. Revenue in the Asia-Pac region, the source of about 40% of Richemont’s sales last year, is rising more slowly as China cracks down on the use of watches and jewelry as bribes and illegitimate gifts.
Growth in that market was 4% in 1-H, excluding currency shifts. Asia-Pac revenue rose 5% on that basis in the past F-Y and 46% in the prior 12 months. Total first half fiscal 2013 sales increased 4.3% to EUR 5.32-B.
Johann Rupert, who is taking a one-year sabbatical from his position as Chairman, has said the Geneva-based company should have been quicker to cull bad investments. Richemont last month said it will not sell online fashion retailer Net-a-Porter.