Luxury goods company Richemont saw its shares jump over 10% on Friday morning after announcing a joint venture with online retailer Farfetch and China's largest online commerce company, Alibaba. This followed Richemont's announcement of its interim results on Friday, where it emphasised a strong performance in its Chinese operations.
While Richemont lost 26% in sales for the six months ended 30 September, the company - chaired by SA billionaire Johann Rupert - saw a saving grace in China, where sales increased by 78%. According to the statement, this statistic alone contained the decline in Asia Pacific to mid-single digit, and partly mitigated double digit declines in Europe, the Americas and Japan.
Nonetheless, gross profit declined by 31% and earnings per share dropped by 82%, according to the update. Online retail sales also contracted 4% but this was offset by a triple digit growth in online retail sales at the company's Maisons which now account for 7% of group sales excluding online distributors.
But Richemont, which owns Cartier, Dunhill, IWC Schaffhausen, Jaeger-LeCoultre, Lancel, and Montblanc, has big plans to tap into China's growing appetite for luxury brands. It says it plans to invest a total of $1.1 billion in Farfetch, taking a combined 25% stake in a new joint venture that will include Farfetch's marketplace operations in the China region.
The French-Portuguese luxury retailer set to launch its shopping channels on Alibaba’s e-commerce platforms to reach the Chinese giant's more than 700 million consumers. Farfetch sells products from over 700 brands and boutiques worldwide.
Richemont's share price had gone up by 10.14% in late morning trade (11:45), changing hands at R120.34 per share.