Questions raised concerning the YNAP deal

The founder of US-listed fashion e-retailer Farfetch is looking to take the company private. Last August Richemont agreed to sell a 47.5% stake in YNAP to Farfetch. The underperformance of Farfetch’s stock price and the potential delisting move are raising questions regarding this deal. To date Richemont has said that it has no financial obligations towards Farfetch and is carefully monitoring the situation.

Resilient Jewellery business

Richemont published a softer H123 performance. The slight sign of improvement in the Americas was shadowed by a deceleration in Asia and a in Europe during the second quarter. The encouraging margin progression for the Jewellery business was largely offset by unfavourable FX movements and higher costs. Although the uncertain macro-environment and higher comparatives is likely to continue to result in soft global consumer sentiment, the group will continue to be protected by the unwavering des

Lower visibility for the year ahead

Richemont published a weaker-than-market-expected start to the new year as the strong recovery in Asia Pacific was partially offset by a higher-than-expected contraction in the Americas. In parallel, China released macroeconomic data for June this morning that fell short of market expectations, with total retail sales growth slowing significantly compared to the previous month. The weakening consumer environment in the US along with uncertain macro conditions in China further reduce the visib

All eyes on the new year

Richemont has reported a lower-than-expected Q3 22/23 trading performance. The strong growth in Japan and Europe was not enough to offset the massive impact of COVID-related disruption in China and the softer growth in the Americas. However, the group said that sales in China recovered nicely at the beginning of January. Although the visibility on consumer trends and the overall macroeconomic environment in China remain low, discretionary spending is going to rebound from the COVID-related di

Outstanding operating performance

The group published an impressive first half after distancing itself from loss-making YNAP. The enduring desirability of Cartier and Van Cleef && Arpels (VCA) across the globe and greater DTC sales in the watch business enabled the operating margin to reach 28.1%. The group sees no slowdown in demand for high-end jewellery and watches around the world to date, however, it is now facing higher comparables for the rest of the year, especially in the Americas.

The long-awaited separation

Richemont has finally reached a deal to separate from YNAP. In the initial stage, Farfetch and Alabbar will acquire 47.5% and 3.2%, respectively, of YNAP’s share capital from Richemont. The deal is expected to complete before the end of 2023. YNAP has been criticised for being the group’s margin drag since its acquisition in 2018. The separation could significantly accelerate the group’s margin progression. The business streamlining could also give the group a better shape just before its AG

China weighs

Richemont has started the new fiscal year ahead of consensus expectations. Strong sales in the Americas, Japan and Europe have offset a larger-than-expected contraction in sales in Asia (-15% yoy). Although the sales contraction started to improve in June in China (-12% in June vs. -37% in Q1) when COVID-related restrictions were progressively eased, the country’s weaker-than-expected GDP growth has fuelled our concerns about the economic environment and the shape of China’s consumer recovery

Expects a slower-than-expected recovery in China

Richemont has published a mixed set of FY21/22 results, with stronger-than-expected sales and an operating profit that missed consensus expectations. Although the group is very confident “to maintain the necessary agility and flexibility to manage global uncertainties”, the chairman warned the recovery in China will be slower and softer than expected. The lack of meaningful updates on the separation of YNAP has also disappointed the market.

Continued acceleration across all Maisons

The group has reported again a consensus-beating quarterly performance. Better-than-expected sales growth across all regions, channels and business areas, highlighting the continued strong performance in Jewellery Maisons and the significant acceleration in Specialist Watchmakers. Despite the ongoing pandemic impact, the strong momentum for luxury jewellery and watches continues across all the group’s main regions. The raised share of direct retail (online & offline), especially in the Watch bu

Impressive profitability of Cartier and VCA

The global Jewellery leader published strong consensus-beating H1 figures. The enduring strong appetites of Chinese consumers for Cartier and VCA, the strong recovery of demand in the Americas and the higher share of retail sales have resulted in an encouraging top-line momentum and outstanding profitability. Richemont has confirmed that it in advanced talks with Farfetch about separating part of its loss-making YNAP. YNAP has been the group’s margin drag since 2018, unlocking the value of YNAP

Another impressive quarter

The jewellery giant has released an outstanding start to the new financial year (Q1 at Richemont equivalent to peers’ Q2). The top line jumped 22% vs. Q1 19, driven by the continued strong momentum in the Jewellery business and an impressive improvement in the Watch business. Sadly, given the high valuation of Richemont and other luxury stocks, the better-than-expected results were not enough to push the share price.

Jewellery shines, driven by China

The group published better-than-expected FY20/21 results, driven by the outstanding year-end performance (equivalent to peers’ Q1). The enduring strong appetite of Chinese consumers for Cartier, the advanced penetration in online business and the agility of the business model have made the group more resilient during the disrupted environment. Although the group remains cautious about the near-term outlook, the accelerated and disciplined digital adoption and the strong desirability of the gro

Continuing to shine in the East

The group has reported solid Q3 20 trading despite the second wave of lockdowns. All divisions experienced a better-than-expected performance. In particular, jewellery Maisons’ sales jumped 14% yoy, driven by the strong resilience of major brands, namely Cartier and VCA. The increased share in the online channel and expanded exposure to the Chinese market has been the main driver of the group’s business and will continue to boost the group’s top line.

Appetites for high-end jewellery & watches are not going away

The group’s strong online business expansion and outstanding performance in China have led both H1 20 revenue and operating profit largely to beat consensus expectations. On top of figures, the announcement of the JV with Alibaba after developing Tmall Luxury Pavilion with Alibaba has clearly confirmed the group’s strategic direction in the coming years. The strong desirability of the group’s brands, the group’s advanced development in e-commerce and the relationship with Alibaba are building a

No immedaite recovery is expected, but Richemont will benefit from the industry's transformation

Richemont has halved its dividend proposal related to FY19/20 after near 10 months of unrest in Hong Kong and COVID-19’s early outbreak has dragged the group’s FY19/20 operating profit down by 22%. Unlike the group’s soft-luxury peers which are upbeat about a business recovery post-COVID-19, Richemont is expecting a “grave economic consequence” for the coming 12-36 months due to pandemic. The changed in economic conditions and consumers’ behaviour will accelerate the industry’s transformation p

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Morning Note – 22 April 2024

City of London Investment Group (CLIG LN) - 3Q IMS: return to growth

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Morning Note – 25 April 2024

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

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Solid close to FY24

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Malvern International - Positive results confirm turnaround on track; cash-generative and a strong bid pipeline

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UK Equities: Overlooked, oversold, and over here

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