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Richemont signals sharp rise in fiscal H1 profit

Compagnie Financière Richemont SA, which owns a portfolio of luxury jewelry and watch brands, on Oct. 17 flagged a sharp increase in profit expected for the first half of fiscal 2018.

The owner of jewelry houses including Cartier and Van Cleef & Arpels, as well as watchmakers Baume & Mercier and Piaget, said operating profit for the six-month period ended Sept. 30 is likely to show an increase of about 45% year over year. The corresponding profit for the period is expected to show an increase of about 80%, Richemont added.

In the first half of fiscal 2017, Richemont posted a 43% year-over-year drop in operating profit to €798 million and a 51% decline in profit to €540 million.

Geneva, Switzerland-based Richemont is due to report interim results Nov. 10, according to its website. The Oct. 17 statement was released in accordance with SIX Swiss Exchange listing rules that require companies to report expected significant increases or decreases in earnings without delay.

Richemont, which also owns a 49% equity interest in online fashion retailer YOOX Net-A-Porter Group SpA, said sales in the six-month period rose 10% year over year on a reported basis and 12% on a constant currency basis.

In the Oct. 17 report, Richemont said the improved performance reflected the nonrecurrence of exceptional inventory buybacks a year earlier, improved trading and the positive impact of movements in period-end exchange rates.

The company opted to repurchase unsold watches from retail partners in a bid to refresh its product lineup and allow it to respond quickly to changing trends and gain market share. The strategy contributed to a drag on sales and profit in the fiscal year ended March 31, 2017.

In May, CEO Johann Rupert said the repurchasing, caused by a slowdown in the Chinese economy, was "mostly over."