(Bloomberg) -- Richemont reported full-year operating profit that trailed analysts’ estimates as the company consolidated its acquisitions of online platforms YNAP and Watchfinder.

  • Earnings climbed 5% to 1.94 billion euros ($2.2 billion) in the 12 months through March. Analysts expected 2.05 billion euros. The operating margin slipped to 13.9%, the lowest in more than a decade.

Key Insights

  • These results show how much of a bet Richemont is making on the importance of online sales to the luxury industry. Last year’s purchases of YNAP and Watchfinder have boosted sales, but eroded profitability. Excluding those units and other one-time costs, operating profit would have increased 13%.
  • Investors may be disappointed that Richemont didn’t give many more details on YNAP’s joint venture with Chinese online retailer Alibaba’s joint venture. The company merely said it’s progressing.
  • Richemont’s double-digit growth in mainland China and Hong Kong will reassure investors. The results come a day after Burberry Group Plc reported disappointing sales growth from that market.

Market Reaction

  • Richemont shares have climbed 16% so far this year. The stock slumped 29% last year, the worst performance in a decade.

Get More

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  • Read the statement.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Thomas Mulier, Kenneth Wong

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