Operating profit was 10 percent above the prior year at 2, 670 million euros (2,976 million dollars). The increase in gross profit was offset by growth in operating expenses. Earnings per share on a diluted basis decreased by 36 percent to 2.356 euros (2.63 dollars).
“We believe that long-term demand for high-quality products will continue to grow around the world. Meanwhile, the Group’s cash flows will continue to be preserved through cost control measures combined with prudent investment in the Maisons’ working capital and capital expenditures. The combination of these factors allows us to look to the future positively,” states Johann Rupert, Chairman of Richemont.
Europe accounted for 30 percent of overall sales. Sales grew in the region by 6 percent sustained by the jewellery category. The highest rates of growth were in the Maisons’ own boutiques located in popular tourist destinations, including Paris, Milan, Madrid and Munich. Markets in the Middle East and Africa continued to report strong, double-digit growth and now account for 8 percent of group sales. Sales in the Asia Pacific region accounted for 39 percent of the group total. Decreases in Hong Kong/Macau, the Group’s largest market, were particularly acute in the second half of the year under review, most notably affecting the watch category and wholesale channel. However, those decreases were partly offset by growth in other markets. The jewellery category was resilient, achieving stable sales at constant exchanges rates.
The Americas region, which accounted for 15 percent of group sales, reported robust domestic demand for jewellery, with other products categories showing positive momentum. In Japan, cautious consumer sentiment after the 47 percent increase in sales enjoyed in the last quarter of the prior financial year dampened sales in the year under review. Notwithstanding these negative effects, sales to tourists visiting Japan increased during the year, especially in the second half of the year following the further Yen depreciation versus the US dollar zone.
Sales through directly operated boutiques and e-commerce accounted for 52 percent of group sales, which increased by 4 percent during the year. The growth in retail sales partly reflected the addition of 77 internal boutiques to the network, which reached 1, 133 stores, and the performance of their e-commerce businesses. The group’s wholesale business, including sales to franchise partners, reported resilient growth. The year’s performance reflected the caution of the company’s business partners in general, particularly in Hong Kong and mainland China.
The jewellery maisons – Cartier, Van Cleef and Arpels and Giampiero Bodino reported a 4 percent growth in sales in a challenging environment. Its boutique networks benefited from further openings, mitigated by a number of flagship closures for renovation, whereas wholesale sales were lower than the comparative period. Jewellery sales were resilient, but overall demand for watch collections suffered due to a weak Asia Pacific environment. Demand in western markets remained robust. The specialist watchmakers’ sales increased by 5 percent overall.
‘Other’ includes the group’s fashion and accessories businesses, Montblanc and the group’s watch component manufacturing activities. The operating results for the year included a one-time, pre-tax gain of 234 million euros (261.2 million dollars) from the disposal of an investment property completed in October 2014. Excluding the above disposal gain, operating losses increased to 64 million euros (71.4 million dollars), largely attributable to the performances at Alfred Dunhill and Lancel. Losses at the Group’s watch component manufacturing facilities were reduced compared to the prior year.
On March 31, 2015, Richemont announced the planned merger of The Net-A-Porter Group with the YOOX Group, which is expected to be completed in September this year. Based upon the results for the year and in keeping with its stated objective to grow dividends steadily over the long term, the Board has proposed a dividend of 1.60 Swiss Franc (1.71 dollars) per share; up from 1.40 Swiss Franc (1.50 dollars) per share last year.
Compared to the same month last year, sales in April increased by 9 percent at actual exchange rates: at constant exchange rates, sales decreased by 8 percent. At actual rates, all regions reported sales growth except for Asia Pacific, which continues to be affected by a difficult trading environment in Hong Kong and Macau.