Richemont reaches 1 trillion won in annual sales here
Cartier's boutique in Cheongdam-dong, Seoul / Courtesy of Richemont Korea
Hermes, Chanel, Louis Vuitton still unwilling to disclose financial statements
By Kim Jae-heun
Richemont Korea, the Korean branch of the Switzerland-based luxury goods holdings company that operates global watch and jewelry brands including Cartier, Montblanc and IWC, recorded annual sales of over 1 trillion won ($828.22 million) in the local market.
It is the first luxury firm that has disclosed an audit report here. According to the financial statement it gave to the Financial Supervisory Service (FSS), Monday, Richemont Korea generated 1.38 trillion won revenue between April 2019 and March 2020.
The number soared by 18.6 percent from 875.6 billion won ($725.31 million) recorded in the previous year. In the same period Richemont Korea's profit also increased by 7.9 percent from 57.2 billion won to 61.7 billion won.
Richemont was able to manage its “quite impressive performance” thanks to the ongoing consumer preference for luxury items. The group owns nearly 10 luxury brands including Piaget, Jaeger-LeCoultre, Vacheron Constantin, Van Cleef & Arpels, Roger Dubuis, Officine Panerai and A. Lange & Sohne. Richemont is considered one of the world's largest luxury watch groups.
Richemont Korea has been keeping its status as a stock company to reveal financial statements every year, while most top-tier luxury fashion brands such as Hermes, Chanel and Louis Vuitton have been maintaining “limited company” status helping them avoid external audits.
If they release their audit reports to the public here, investors will have better access to “keen factors” such as how much they earned and how much in dividends they transferred to their headquarters.
It is hard to say Richemont Korea is setting a good example for international luxury firms operating here by disclosing its financial statements, given the large amount of dividends it sends to its Swiss headquarters. The Korean branch of U.S. luxury jewelry brand Tiffany publicized recently it sent 45.2 billion won of dividends to its U.S. headquarters despite earning 10.7 billion won as net income. Tiffany Korea received much criticism for the 444 percent dividend payout ratio.
But Hermes, Chanel and Louis Vuitton have been reluctant to talk about their financial performances including how much tax they pay to the government, and some experts have used the comparison to praise Richemont and Tiffany.
Last year, the National Assembly revised the law to force international firms operating as limited companies here to undergo external audits run by the FSS. All the limited companies now have to submit their financial statements but many luxury brands including Hermes, Chanel and Louis Vuitton are rumored to be preparing to turn into limited liability companies to avoid audits.
When The Korea Times asked the three brands about their plans to change their company type, all refused to comment.