Chronic deficits and recapitalisations: The challenge of Richemont's 'Soft Luxury' division

Swiss leader Richemont, driven by the strength of its jewellery houses, is seeing the weaknesses of its fashion and accessories division intensify. Amid repeated capital injections and slowing growth, the group faces a structural profitability challenge.

While the strength of Richemont's jewellery and watchmaking divisions is well-established, the 'Soft Luxury' division is showing warning signs. Behind the prestigious names, several of the group's iconic houses are navigating financial turbulence, requiring regular interventions from the parent company.

Financial injections that raise questions

The case of Delvaux perfectly illustrates these tensions. According to information from Retail Detail, Richemont carried out a massive debt conversion in April 2026. 100.6 million euros (117.7 million dollars) were converted into equity to stabilise the Belgian leather goods brand. This operation follows an initial injection of 90 million euros in 2022, revealing that the brand's ultra-premium positioning is still struggling to be self-financing.

The situation at the house of Alaïa is hardly more stable from an accounting perspective. Although critics unanimously praise the brand's creative revival, media outlet Glitz highlights that its growth remains loss-making. Despite an improvement in commercial momentum, Alaïa remains structurally dependent on the group's financial support. It is struggling to transform its artistic prestige into operational profitability.

Chloé: a new point of concern?

In this contrasting landscape, Chloé is now the focus of analysts' attention. While the Parisian house has shown robust growth in the past — with an estimated turnover of 660 million euros in 2023 according to Vogue — it now operates in a division that is losing momentum.

As early as the 2023 financial year, sales in the 'Other' division, which includes Chloé, Alaïa and Montblanc, had slowed down significantly. In a global context of a normalising luxury market, this deceleration automatically increases the pressure on brands with the most fragile margins.

Challenge of critical mass

The contrast with the group's 'powerhouses' is striking. Driven by Cartier and Van Cleef & Arpels, Richemont is posting record overall results. However, the fashion segment remains historically complex for the group. Unlike its rivals LVMH or Kering, Richemont suffers from a lack of critical mass in ready-to-wear, a handicap regularly pointed out by market observers.

The acquisition of new assets such as Gianvito Rossi demonstrates a desire to move upmarket and streamline the portfolio. However, the results of this strategic experiment remain mixed.

Towards an inevitable trade-off?

It remains to be seen whether Johann Rupert will agree to prop up houses with intact prestige but elusive profitability in a market that no longer forgives chronic deficits. Faced with investors who are now reluctant to tolerate long-term loss-making centres, the group could be forced to accept a structural dependence of these houses on jewellery or consider a more radical reorganisation of its portfolio. The answer to this dilemma will reshape the group's strategic balance for the decade to come.

This article was translated to English using an AI tool.

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