First-quarter sales at Compagnie Financière Richemont SA gained 13 percent, boosted by robust growth at luxury jewelers Cartier and Van Cleef & Arpels.
This story first appeared in the July 17, 2008 issue of WWD. Subscribe Today.
For the three months ended June 30, Richemont said sales rose to 1.42 billion euros, or $2.23 billion, compared with 1.26 billion euros, or $1.98 billion, in the same period last year.
The parent company of luxury brands such as Chloé, Panerai and IWC, as well as Cartier and Van Cleef & Arpels, said gains at the jewelry units were “very strong” and sales in the Asia-Pacific region, excluding Japan, increased 21 percent.
Richemont cautioned that first-quarter sales should not be seen as indicative of sales trends for the rest of the financial year because a large part of Richemont’s business is done in the quarter ending Dec. 31. Richemont’s first-quarter sales typically make up 20 to 25 percent of the group’s annual sales.
In a research note Wednesday, analysts at Goldman Sachs in London said: “Richemont is on our conviction buy list, as we believe it offers the most attractive brand and product mix in the luxury sector. This delivery shows that with consumers seeking quality as volatility increases, Richemont’s focus on the higher-end top brands is being rewarded.”
Richemont’s overall 14 percent increase in retail sales and 12 percent gain in wholesale sales “bodes well for profitability,” Goldman Sachs said. The research note cited “sharp deceleration in demand in Asia,” as a potential risk to performance.
In contrast with the growth of Richemont’s jewelry and watchmaking houses, sales at Chloé saw a “mid-single-digit decrease [during the period], reflecting lower retail sales,” the company said.
In March, Chloé appointed Hannah MacGibbon to replace Paulo Melim Andersson as creative director. She will show her first full collection during Paris Fashion Week in October. A pre-spring collection was unveiled to buyers in June.
Sales in the group’s “other business,” division, of which Chloé is part, grew 23 percent to 75 million euros, or $117 million during the period, which the company attributed to acquisitions it made during the previous financial year, including a stake in Azzedine Alaïa and the watch component manufacturer Donze-Baume SA.
Richemont reported sales only on Wednesday and will disclose interim results in mid-November, after a trading statement for the five months to August is released in mid-September.
By division, Richemont’s jewelry houses showed one of the highest rates of growth across the company’s five categories during the period — 16 percent — reporting sales of 737 million euros, or $1.15 billion. Sales in the specialist watchmaking division rose 13 percent at actual exchange rates to 415 million euros, or $648 million.
All dollar figures have been converted from the euro at average exchange rates for the period. Stripping out the effects of currency fluctuations, sales at the jewelry units would have risen 25 percent, and sales at the specialist watchmaking division would have increased 19 percent. Overall, Richemont’s sales in the first quarter would have advanced 20 percent at constant exchange rates.
By region, sales in Europe, which includes the Middle East, rose 17 percent at actual exchange rates to 651 million euros, or $1.01 billion. Sales in the Asia-Pacific region, excluding Japan, rose 21 percent at actual exchange rates — or 35 percent at constant exchange rates — to 353 million euros, or $551 million. The company said this reflected strong performance in China and Hong Kong, and added that sales in the region represented 25 percent of the group’s turnover during the quarter.
Sales in the Americas grew 6 percent at actual exchange rates and 20 percent at constant exchange rates, reflecting the effect of the dollar’s conversion to the strong euro. Sales in Japan declined 8 percent to 153 million euros, or $239 million, because of what the company called “challenging market conditions” in the region.
Sales at the group’s writing instruments division were flat at 140 million euros, or $218 million, and sales at Richemont’s leather and accessories units, which include Alfred Dunhill and Lancel, declined 2 percent at actual exchange rates to 61 million euros, or $95 million. At constant exchange rates, sales of writing instruments and leather goods both rose 5 percent. The company said a 6 percent sales increase at Alfred Dunhill, with strong sales in the Asia-Pacific region, was offset by lower sales in Japan.
After the trading update, Richemont’s share price was up 4.49 percent to 55.80 Swiss francs, or $54.83, a share, on the Swiss stock exchange early Wednesday afternoon.