LONDON — Richemont reaped the rewards of a sustained demand for high-end jewelry and watches in the face of a tough economic climate Monday, when it reported a 24 percent increase in third-quarter sales to 2.62 billion euros, or $3.51 billion, for the three months ended Dec. 31, from 2.12 billion euros, or $2.84 billion, in the same period last year.
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While sales grew across all regions, the performance of Asia-Pacific stood out as “above the group average,” Richemont said, notching a 36 percent rise to 1.05 billion euros, or $1.40 billion. The growth was driven by strong demand in Hong Kong and Mainland China. The company did note, however, that sales growth in the Asia-Pacific region had slowed compared to the year’s first half, when sales there grew 48 percent. Richemont said the slowdown reflected “demanding comparative figures” and a move towards more sustainable long-term growth rates in the territory.
All dollar figures have been calculated at average exchange rates for the period.
Meanwhile, sales growth in Europe, which includes the Middle East and Russia, was boosted by purchases made by travelers. Sales in the region rose 16 percent to 914 million euros, or $1.22 billion. And the Americas also registered strong growth of 23 percent, to 382 million euros, or $511.9 million, which Richemont attributed to a growing demand for jewelry and watches there, as well as a strong performance from Net-a-porter.
Johann Rupert, Richemont’s executive chairman and group chief executive officer, described the figures as “solid,” adding that a slowdown from the growth the company saw in the first six months of the fiscal year reflects: “A combination of more demanding comparative figures as well as the volatile and challenging economic environment.”
Rupert also noted that sales in the month of December rose 21 percent compared to the same period last year. Retail sales rose 28 percent during the year, reflecting Richemont’s boutique expansion strategy and sales at Net-a-porter, while wholesale sales gained 20 percent.
All the firm’s categories registered growth during the quarter. Richemont’s jewelry business rose 25 percent to 1.36 billion euros, or $1.82 billion, while its specialist watchmakers division grew 28 percent to 697 million euros, or $933 million. The company’s other businesses, which include Chloé, Dunhill and Net-a-porter, rose 30 percent to 339 million euros, or $454 million. Montblanc was the exception, registering a rise of just 2 percent, which the company attributed to the downsizing of the house’s wholesale distribution and weak domestic demand in developed markets.
Rupert also noted that operating profit for the full year will be “significantly higher” than last year.
Thomas Chauvet, an analyst at Citi in London, called the sales figures “a good set of numbers. Significant [emerging market] exposure, a premium brand portfolio and a clear distribution strategy alongside greater cost discipline, good cash flow generation and a strong balance sheet give Richemont the attributes of a good, long-term growth story,” said Chauvet in a research note.