ZURICH, Switzerland — Richemont said a deal with Alibaba and Farfetch would further drive its business in its biggest market in China which helped group sales recover in the three months to September 30.
Richemont and Chinese e-commerce giant Alibaba said late on Thursday they were investing $1.1 billion — $550 million each — in online luxury fashion retailer Farfetch and its new Chinese marketplace.
“You are either a disruptor or a disruptee and I hate being the latter,” Richemont Chairman Johann Rupert told reporters on a call on Friday.
He said the deal would give the Cartier maker the technology to better serve its customers, but by no means signalled that Richemont was interested in a merger or in taking over Farfetch.
“We’re dealing with a public company that we hope will remain independent,” Rupert said, adding Jose Neves remained in charge at Farfetch.
Richemont shares were up 11.4 percent at 08.31 am GMT.
Luxury goods groups have seen sales recover in the latest quarter, helped by a surge in e-commerce, but new lockdowns in Europe don’t bode well for the rest of the year.
“A strong presence in China and an acceleration in digital initiatives have partially mitigated the consequences of temporary store closures and a halt in tourism worldwide,” Rupert said in a statement.
The Geneva-based group posted an 82 percent lower net profit of €159 million ($188 million) for its first half to September 30, hit by higher losses at online distributors Yoox Net-a-Porter (YNAP) and Watchfinder.
Rupert said on a call that YNAP remained important to Richemont and the Farfetch Alibaba deal did not signal a lack of confidence in YNAP.
Sales were down 2 percent in constant currency in the quarter to September, after a 47 percent decline in the three months to June. The recovery was driven by China which has overtaken the US as Richemont’s biggest market after sales shot up 78 percent in the first six months of the year.
By Silke Koltrowitz; editors: Michael Shields and Elaine Hardcastle.