Richemont “Destroys” More than EUR 450m of Unsold Watches in Two Years

By rolex
June 10, 2021
3 min read

It isn’t ‘breaking news’ to say that the watch business confronted tough situations in 2015 and 2016. Business had been extreme because of diminishing deals. The Richemont Group – the extravagance stalwart that claims Cartier, IWC, and Montblanc among others – had likewise been influenced by this situation,  as detailed by MONOCHROME here . Some portion of Richemont’s plan to improve the circumstance was a gigantic buyback methodology intended to lessen stock at retailers and empower them to put resources into new assortments. What was not known, up to this point, was the all out estimation of watches repurchased by the group… According to The Guardian , we’re discussing around a large portion of a billion Euro/Dollar. 

The circumstance is straightforward. In 2015, 2016, and 2017, deals of watches declined, including watch marks that are essential for the Richemont Group (A. Lange & Söhne, Baume et Mercier, Cartier, IWC, Jaeger-LeCoultre, Montblanc, Panerai, Piaget, Roger Dubuis and Vacheron Constantin, among others). This prompted a basic circumstance for the Richemont Group as deals were plunging and retailers stayed with a large inventory of unsold watches.

This implied two issues for the group. In the first place, to clean their books, retailers began to sell these unsold watches at limited costs. In addition to the fact that this benefitted the supposed ‘grey market’, it was a negative move to the picture of the brands. Also, when retailers sit on enormous loads of unsold stock, they will probably purchase less watches at the following SIHH. The Richemont Group chose to balance the dim market and even lower deals later on by repurchasing stock from retailers and official shops – something we clarified in our investigation of the yearly results of the Richemont Group. The aggregate sum of watches repurchased by the Richemont Group in 2016 and 2017, as per The Guardian, is about GBP 400m – subsequently around EUR 450m or USD 530m. That’s practically a large portion of a billion in watches!

What to do with these unsold watches once they are once again at the fabricates? All things considered, the word “destroys” (in the title) was deliberate albeit, in truth, watches are destroyed and afterward reused. Gold cases are dissolved and re-utilized, and developments are safeguarded and consolidated in new watches, with various cases, plans and dials.

One way or another, this buyback crusade has seriously affected the Group’s 2017-2018 results. Fundamental benefits rose 5% to EUR 1.8bn in the year that finished 31 March 2018. This presentation baffled financial backers, with shares dropping 5% to SFr93.90 (£69.70) when the results had been published.

The Richemont Group is right now changing procedure with an uncommon move towards online business – for the watchmaking brands as well as for the whole group, which has as of late gained 95% of style e-platform Yoox-Net-A-Porter. Additionally, a significant number of the past CEOs and heads have been supplanted, with two huge reshuffles ( here and here ).

You can r ead the full story in The Guardian here .