Richemont [JSE:CFR] reported full-year operating profit that trailed analysts' estimates as the company consolidated its acquisitions of online platforms YNAP and Watchfinder.
Earnings climbed 5% to €1.94bn in the 12 months through March. Analysts expected €2.05bn. The operating margin slipped to 13.9%, the lowest in more than a decade.
These results show how much of a bet Richemont is making on e-commerce. Last year's purchases of YNAP and Watchfinder have boosted sales but eroded profitability.
Excluding those units and other one-time costs, operating profit would have increased 13%. Investors may be disappointed that Richemont didn't give many more details on YNAP's joint venture with Chinese online retailer Alibaba. The company merely said it's progressing.
Richemont's double-digit growth in mainland China and Hong Kong will reassure investors. The results come a day after Burberry Group Plc reported disappointing sales growth from that market.
Richemont shares have climbed 16% so far this year. The stock slumped 29% last year, the worst performance in a decade.