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Johannesburg - Swiss-based luxury goods group Richemont Securities [JSE:RCH] on Wednesday reported that its sales for the five months ended August 2010 increased by 37% at actual exchange rates compared with a year ago. At constant exchange rates and excluding the impact on sales of the acquisition of NET-A-PORTER.COM in April 2010, sales increased by 22%.
The company released the sales figures ahead of its annual general meeting which will to be held later today in Geneva.
Executive chairperson and group CEO Johann Rupert said thanks to the double-digit sales growth, Richemont will report a significantly higher first half profit.
The company said the strong growth in sales reflects, in part, the low comparative figures reported in the prior period.
Europe, including the Middle East, remains the most important region for the group with sales accounting for 41% of overall sales.
At constant exchange rates and excluding new businesses, sales in the European region increased by 15%. The Asia-Pacific region, including China, continued to report strong sales growth.
The Americas region also reported strong growth, albeit compared to very weak comparative figures. Sales growth in Japan was largely due to favourable exchange rate effects.
Excluding the acquisition of NET-A-PORTER, retail sales increased by 24% at constant exchange rates, reflecting strong growth in all regions.
The group's wholesale business, which suffered in particular during the comparative period due to de-stocking by business partners in some markets, also reported strong growth. The proportion of retail sales has increased from 43% in the comparative period to 47% in the period under review.
All Maisons have benefited from the improvement in the economic climate, the group noted.
"The improved trading environment is certainly welcomed. However, it is far too soon to draw any conclusions about the sustainability of the economic recovery or whether the recession is truly behind us," Rupert said.
"This time last year we were still seeing falling sales. This year, with double-digit sales growth already in hand, Richemont will report significantly higher first half profit. However, the rest of the year is less straightforward. In the second half of last year, we saw some recovery in sales, setting higher comparative figures against which sales in the six months from October to March will be measured. Relative to the present conditions, those comparative figures were achieved with a weaker euro against the dollar and yen," he said.
"Compared to the second half of last year, the current strength of the Swiss franc will be negative for the cost of sales."
He added that while sales in the growth markets of Asia-Pacific and the Middle East continue to expand, sales in other regions remain below the record levels. This reflects the continuing difficulties in Western economies. These sales results highlight our Maisons' strength in growth markets.
Rupert added that the group is in a strong financial position, with a net cash position at 31 August 2010 of €1.9bn, broadly in line with the level at the beginning of the current financial year, despite the acquisition of NET-A-PORTER.
"Our strong balance sheet, continuing discipline and powerful Maisons allow us to face the foreseeable future with a degree of optimism," he added.
Richemont's results for the six months ending September 2010 will be released on 12 November 2010.
