Richemont’s continuing buy-back of unsold inventory around the world cost it around €203 million in the full financial year that ended March 31, a drop from the €278 million it spent in 2016-17.
The group announced sales at constant exchange rates rising 8% to €10.979 billion. The figure would have been higher were it not for the “exceptional inventory buy-backs” the end of year financial report states.
Profit for the year rose by 1% to €1.22 billion.
The buy-back program aims to discourage Richemont’s retailers from offloading unsold watches on the grey market, which puts legitimate partners under pressure from cut price pieces selling on the secondary market.
“The Specialist Watchmakers continued to focus on optimizing their distribution network and adapting their structures accordingly. Our approach to the grey market remains uncompromising,” Richemont chairman Johann Rupert states.
“Over the period, we implemented further inventory buy-backs and strengthened the approach to managing sell-in versus sell-out at our multi-brand retail partners,” he adds.
Sales in the Americas grew by 8%, driven by strong retail sales, supported by jewelry and clothing. Retail sales also reflected increased online sales and the favorable full year impact of the reopening of the Cartier flagship store in New York in September 2016. Wholesale and watch sales both declined, impacted by inventory management initiatives. The region’s contribution to Group sales amounted to 16%.
World-wide sales of Specialist Watchmakers declined by 6%. Inventory control measures including buy backs and distribution optimization initiatives contributed to a “double digit” wholesale fall in sales. “Excluding inventory buy-backs in both years [2017 and 2018] sales would have been broadly in line,” the financial statement said.