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Richemont sells luxury leather bagmaker Lancel to Piquadro
[ZURICH] Richemont has completed the sale of its struggling French leather bag maker Lancel to Italian high-end briefcase maker Piquadro in a profit share deal, the luxury goods maker said on Monday.
Richemont, the owner of Cartier jewellery as well as watch brands including Piaget and IWC, said the deal would have no material impact on its balance sheet, cash flow or results for year ending 31 March 2019.
Under the arrangement Richemont will get a share of the profits earned by Lancel over the next 10 years, up to a maximum of 35 million euros (S$54.62 million).
The deal is the latest by Richemont, which has been reshaping parts of its portfolio in recent months, to move out of so-called soft luxury areas like fashion and increase its presence in the online sector.
"The disposal of Lancel makes sense," said Jon Cox, an analyst at Kepler Cheuvreux. "Richemont couldn't get it to work."
On Friday, Richemont said it was buying Watchfinder.co.uk, an online platform for pre-owned watches.
The company has also completed the take of Yoox Net-a-Porter , the online fashion retailer it originally spun off in 2015.
Richemont had been in talks with Bologna-based Piquadro since March to sell Lancel, which was founded in 1876, but has struggled in recent years.
For the fiscal year ended March 31, Lancel made a loss of 23 million euros from sales of around 53 million euros, Piquadro said.
Still, Piquadro Chief Executive Marco Palmieri contends the brand offered "great potential for growth."
"This acquisition is part of a strategy of bringing together accessory brands that we began about a year ago with the acquisition of the historic Florentine leather goods brand The Bridge, a strategy that we intend to pursue with a view to generating greater and greater synergies," he said in a statement.
Luca Solca, an analyst at Exane BNP Paribas, said the deal was a small positive for Richemont, showing it was getting to grips with the loss-making "other divisions" which also include pen maker Montblanc and French fashion house Chloe.
"Richemont had acquired the Maison Lancel brand back in 1997 for 270 million euros, but it struggled to grow it," Solca said.