By Michelle Graff
Geneva--Sales of jewelry and watches at the company’s own stores were what fueled growth for Richemont, while the wholesale side of the business—particularly in watches—continues to shrink.

The Geneva-based luxury goods conglomerate reported Friday that for the fiscal year ended March 31, total sales rose 3 percent year-over-year (8 percent at constant exchange rates) to $12.93 billion. Operating profit grew by 5 percent and operating margin was 16.8 percent, up from 16.6 percent in the fiscal year ended March 31, 2017.

Retail sales, meaning sales at company-owned and -operated stores and websites, increased 8 percent (14 percent at constant exchange rates).

Richemont, which owns Cartier, Van Cleef & Arpels, Piaget and watch brands including Vacheron Constantin, Baume & Mercier and Jaeger-LeCoultre, said jewelry and watch sales fueled the increase on the retail side, noting that it opened a net of six jewelry and watch stores during the fiscal year.

Meanwhile, wholesale sales, including sales to franchise partners, declined 5 percent (1 percent at constant exchange rates). Watches were a particularly weak category at wholesale, with sales declining by a double-digit percentage.

In the chairman’s commentary on the results, Johann Rupert said jewelry “continued to perform strongly” while Richemont is “continuing to address the challenges” that confront its watch business.

Rupert said its watch brands are focused on optimizing distribution networks and managing sell-in versus sell-out at the jewelry stores that carry them. Richemont bought back a total of $238.6 million in watches from retailers over the fiscal year after buying back more than $300 million in the prior fiscal year. 

He also said the company’s approach to keeping its watches off the gray market, meaning out of the hands of unauthorized dealers, “remains uncompromising.”
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Region-wise, Richemont saw sales grow by a double-digit percentage in mainland China, Hong Kong, Korea and Macau, while sales in the Americas were up 1 percent (8 percent at constant exchange rates). The reopening of the Cartier flagship store in New York helped boost results in the region.

Also during the fiscal year, Richemont moved to expand its e-commerce reach by putting in a bid to take full control of Yoox Net-a-Porter, the online retailer in which it currently has a 49 percent stake. It would take Yoox Net-a-Porter, which trades on the Milan stock exchange, private and operate it as a separate company.

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