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 programme 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 optimising 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.
The UK was singled out as strong performer in the financial year, but the rest of Western Europe saw a 2% dip in sales across jewellery and watches. The Continent was adversely impacted by the relative strength of the euro, inventory buy-backs in the fourth quarter of the year, tight inventory control at the external points of sale of the Group’s multi-brand retail partners and the optimisation of the wholesale distribution network.
Sales in France contracted and were in line with prior year in Switzerland. The United Kingdom enjoyed good growth, Richemont reports.
World-wide sales of Specialist Watchmakers declined by 6%. Inventory control measures including buy backs and distribution optimisation 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.