Richemont’s FY22 Clouded by Margin Miss, YNAP Uncertainty — Earnings Review

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By Joshua Kirby

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Compagnie Financiere Richemont SA reported results for its fiscal year to March 31 on Friday. Here’s what you need to know:

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SALES: The Swiss luxury-goods group made total sales of 19.18 billion euros ($20.30 billion) in fiscal 2022, 44% higher at constant currency than the previous year. This beat expectations for EUR18.97 billion, according to a poll of analysts’ estimates compiled by FactSet. Sales in the year’s final quarter slowed only slowly, despite headwinds from China lockdowns and the Russia-Ukraine conflict, the company said.

EARNINGS: Operating profit more than doubled on year to EUR3.39 billion, on a margin that rose to 17.7%, however, this was lower than had been expected, according to analysts at Jefferies and Citi.

WHAT WE WATCHED:

-CHINA: The company didn’t specify figures for the market, but did note the effect of pandemic lockdowns at the end of the quarter, which dragged sales there. In a call following the results, Chairman Johann Rupert warned that China could be slow to recover from the current headwinds. “The country is going to take a big economic blow,” he said.

-YOOX NET-A-PORTER: Talks continue over a deal to divest overall control of struggling e-commerce platform Yoox Net-A-Porter, Richemont said, surprising many observers who were hoping for a more concrete update. The lack of deal so far is a “real surprise,” analysts at Jefferies said in a note. Others from brokerage Bernstein and investment bank Vontobel warned that YNAP risks becoming the main hinge for Richemont’s share performance, hanging like a “sword of Damocles” over the group.

-MARKET REACTION: Shares plummeted more than 10% at market open Friday. Analysts highlighted the YNAP uncertainty and disappointing profitability across business areas amid higher spending, which offset strong top-line growth.

Write to Joshua Kirby at [email protected]; @joshualeokirby

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Credit: www.marketwatch.com /

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