LONDON — A stronger euro and a slowdown in Chinese demand dented Compagnie Financière Richemont’s revenue growth in the first five months of the year, as the company prepares to move forward without its chairman, Johann Rupert.
As reported, Rupert is taking a yearlong sabbatical starting today from the parent of brands including Cartier, Chloé and Alfred Dunhill.
Richemont said, in light of the sabbatical, Rupert did not stand for reelection to the company’s board for the coming year, and that Yves-André Istel, a board member since 1990, would assume the role of chairman, and Joshua Malherbe, who joined the board in 2010, would serve as deputy chairman.
The company said separately that sales in the first five months to Aug. 31 advanced 4 percent, with a slowdown in sales in Mainland China and the weakening of the U.S. dollar and the yen against the euro.
The stock closed down 2.3 percent at 91.30 Swiss francs, or $97.77 at current exchange, on Thursday.
At constant exchange rates, worldwide sales rose 9 percent, broadly in line with analysts’ expectations but slower than at the beginning of the year. In May, Richemont reported that the fiscal year was off to a positive start, with April sales 13 percent above the comparative period, and 12 percent at constant exchange rates.
Still, Richemont called sales growth at constant exchange rates “satisfactory” across all regions in view of demanding year-on-year comparatives in Europe, the Middle East and Asia-Pacific.
European and Middle Eastern sales grew 10 percent on a constant currency basis, benefiting from tourist flows. In Asia-Pacific, sales advanced 4 percent with “good growth” in Hong Kong and Macau. That growth was offset by lower sales in Mainland China, “largely reflecting a prudent consumer sentiment after several years of exceptional expansion,” the company said.
In the corresponding period last year, sales in Asia-Pacific grew by 12 percent at constant exchange rates and by 27 percent at actual rates.
Richemont said growth in the Americas was strong, due to the “sustained momentum” of jewelry sales and the acquisition of the Peter Millar brand last year. Sales in the Americas and Japan both rose 17 percent on a constant currency basis.
By product category, the watch division advanced 13 percent, while jewelry was up 8 percent at constant currency. Montblanc’s sales were flat. Richemont said the brand was less exposed to tourist purchases than many of the other businesses in the group. It noted Net-a-porter reported double-digit growth in the five months.
In his report on the results, Thomas Chauvet at Citi Research said Swiss watch exports in the May-July period and continued wholesale weakness for most soft luxury brands — and very likely for Chloé, Lancel and Dunhill — should have “logically impacted” Richemont’s wholesale business over the period.
He also estimated there was “single-digit growth” in the fashion brands, but added that overall there is potential for stronger earnings in the second half.
Earlier this month, HSBC issued a report saying it expected sales at Richemont to rebound in the second half, thanks to a pickup in watch trends and the continued strong performance of Cartier.
The bank also downplayed the slowdown in Mainland China. “It’s not all about China and indeed Mainland China only represented 9 percent of Richemont sales in [the full year to March 2013]. Recent indications…point to a very strong Hong Kong/Macau and a stabilization — finally — of mainland demand,” the report said.
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