YNAP is a Damocles’ sword, but fashion reassures Richemont

YNAP is a Damocles’ sword, but fashion reassures Richemont

Richemont’s concerns aren’t tied to fashion or leather goods. They are called Russia, China and, most of all, YNAP, which continues to be an unresolved issue. And so, the operating margin published by the group for 2021 fell below the forecasts and the price per share fell. “Even when China will stop isolating itself, the recovery won’t be so quick and won’t have 3 digits”, said Richemont’s president Johann Rupert.

Fashion reassures Richemont

In the fiscal year tat closed on March 31st, sales of the “Other” division (which groups the fashion brands of the Swiss conglomerate), grew by 53% to 2.056 billion euro. A success that Richemont attributes to the push of AlaïaChloé and Montblanc’s new creative directors. But, also, to the contribution of Delvaux. Yet, fact remains that even if margins improved by 78%, the same division recorded an operative loss of 47 million euro.

China, Russia and all the rest

Overall, the 21/22 results published by Richemont showed a 46% revenue growth, to 19.18 billion euro. The operating margin more than doubled (+129%) to 3.39 billion, but still below the 3.79 billion forecasted by analysts. The Swiss giant explained that the lockdowns in China are weighing the performance, with 40% of the local retail chain closed down. Meanwhile, issues with the supply chains and rising interest rates have slowed the growth in the USA.

YNAP is a Damocles’ sword

But what weighs the most on Richemont (“as a Damocles’ sword”, says Jean-Philippe Bertschy, analyst with Vontobel) is the unresolved divestment of YNAP (Yoox Net-a-Porter), the group’s e-commerce platform. “There is incredible complexity, which means that the process has been inevitably prolonged. We can’t wait for this matter to be resolved”, said Richemont in a note accompanying the data. The lack of solution is a “true surprise”, say analysts Jefferies Flavio Cereda and Kathryn Parker.

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