News 
On 4 November, the Richemont Group published first half results for its 2016-2017 business activities ending on 30 September. During these six months, group sales stood at 5.08 billion Euros, 13% down at real exchange rates (12% lower at constant exchange rates).
The steep decline in results for this first half is explained by the challenging global environment, exceptionally large stock buybacks and a high comparison base with the first half of the previous financial year.
Sales achieved in proprietary retail outlets and online were better overall than those recorded by distributors. Growth of the «Accessories» activity and strong performance of jewellery partly offset weak watch sales. From the geographical angle, most markets are declining, with the notable exception of China, the United Kingdom and South Korea.
Several firms helped their multi-brand partners to improve the quality of their stocks by buying back slow-moving products. This initiative, together with the closure of some points of sale, brought non-recurring charges of 249 million Euros. Combined with the reduction in turnover and in the gross margin, these charges contributed to the 43% downturn in the operating result. Excluding these non-recurring charges, the operating result would have fallen by 25%. The net result is 51% lower than in the first half of last year.
Richemont has acted prudently, so safeguarding its cashflow. Control over the working capital requirement enabled the operating cashflow downturn to be limited. As at 30 September 2016, the group had net cash in hand worth more than 4.55 billion Euros.
On the watch industry side, the group intends to take action to resolve the issue of the overcapacity of its production facilities by adapting its structures to the level of demand.
The Richemont managers remain convinced of the long-term prospects held out by high quality products and, in particular, watches and jewellery. The different brands are timeless bywords for quality and superb craftsmanship - values that are particularly sought after in these uncertain times.
Richemont has also announced the following changes to its Board of Directors: Richard Lepeu, the Chief Executive Officer, is to retire on 31 March 2017 after spending thirty years in the service of the group. Gary Saage, the Finance Director, is to return to his family in the United States and will quit his post on 31 July 2017. He will be replaced by Burkhart Grund, currently Assistant Finance Director. Johann Rupert has also decided to restructure the responsibilities of the group senior managers in order to strengthen the ability to respond rapidly to the new challenges identified by the group. Georges Kern, CEO of IWC Schaffhausen, will hold the post of Head of the Watch Manufacturing, Marketing and Digital sector. Jérôme Lambert, CEO of Montblanc, will be in charge of operations for the regional and central services together with brands other than those in the watch and jewellery fields. All these changes and appointments will have to be approved at the group General Meeting scheduled for September 2017.
November 17, 2016