CFRUY Compagnie Financiere Richemont (PK)

By Joshua Kirby

Shares in Compagnie Financiere Richemont SA traded sharply higher Friday morning after the Swiss luxury-goods giant posted expectation-defying first-half earnings and said it is in talks to divest control of struggling e-commerce platform Yoox-Net-A-Porter.

At 0830 GMT, Richemont shares were trading 7.8% higher at CHF132.15, having surged close to 10% at market open.

Sales in the six months to Sept. 30 accelerated to reach 8.91 billion euros ($10.2 billion), 20% higher than the same period of 2019, and well ahead of analysts' expectations. Operating profit meanwhile surged to EUR1.95 billion, even further ahead of consensus estimates.

The results are "best in class" for the luxury-goods industry, said Vontobel analyst Jean-Philippe Bertschy, noting that Richemont's profitability matched that seen at sector leaders like French fashion group Hermes International SCA, or the soft-luxury division at conglomerate LVMH Moet Hennessy Louis Vuitton SE. The results confirm that the Cartier owner is "best-positioned in jewelry," a major growth engine for the luxury industry ahead, Mr. Bertschy added.

Richemont said it is in talks to divest a stake in YNAP to British-Portuguese peer Farfetch Ltd. Other luxury players have also expressed interest in investing in the platform, Chairman Johann Rupert confirmed in a call with reporters. The news follows growing calls from shareholders and analysts for a sale or spinoff of the business.

The development will allow Richemont to focus on being a pure-play luxury business, Piral Dadhania of RBC Capital Market said. "We would expect this progress to be well received," he said.

Nevertheless, some investors may be disappointed by the scope of the talks, according to Citi analyst Thomas Chauvet. The outlined plan would see YNAP become a "neutral platform," with Richemont retaining a minority stake, but some shareholders may have been hoping for a more direct separation of the loss-making business, he said.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

November 12, 2021 03:49 ET (08:49 GMT)

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