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Richemont joins the luxury sales ‘moderation club’

Q2 sales at the “other” division, which includes Chloé, Alaïa and Delvaux, were roughly in line with the same period last year. Online luxury fashion retailer Yoox Net-A-Porter (YNAP) — whose performance is listed under ‘Results from discontinued operations’ since Richemont agreed last year to sell a 47.5 per cent stake in the loss-making business to Farfetch — saw sales decline by 10 per cent at constant exchange rates.

The European Commission ruled in October that Farfetch can proceed with its acquisition of the stake in YNAP. However, Farfetch’s share price has plummeted since the deal was first announced. Asked about the deal, Rupert said: “We cannot comment on a public company, especially since they are going to report their [Q3] results. What I can tell you, however, is what interests us, which is the technical solutions. Colleagues tell me that they’re not only meeting expectations, but that things are going very, very well.” (As part of the deal, YNAP adopted Farfetch Platform Solutions, the luxury marketplace’s white label tech offering.)

He also said: “[Richemont’s] total exposure to Farfetch is less than one year’s expenditure on communication… If we spend €2 billion a year on communication [the group has spent roughly €2 billion a year in communication and leases over the last 14 years], we’re getting our clients to know us. But we’re not getting to know them. And ultimately, in today’s world, if you really want to serve your clients, you need to know what they really want and what they think, what their emotions are, and to service needs that they may not actually have at the moment, but that you think they may have if the products are available.”

Thomas Chauvet, head of luxury and consumer discretionary research at Citi, wrote: “In a soft landing scenario, we see Richemont as a fundamentally stronger business than during prior industry downturns [thanks to its] greater scale, more balanced product/geographic mix, shorter production lead times, greater share of own retail distribution, cleaner inventories in wholesale, more cash and potential succession changes.”

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More from this author:

Exuberant luxury growth is over. What’s next?

Hermès impresses with double-digit growth in Q3

The Long View by Vogue Business: Unpacking luxury’s hospitality ambitions

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