LONDON — Double-digit growth in retail sales and a strong performance from Cartier and other jewelry houses helped Compagnie Financière Richemont outstrip analysts’ expectations with a 7 percent rise in third-quarter sales to 3.12 billion euros at constant exchange.
At actual rates, sales were up 1 percent, while retail sales rose 7 percent in the crucial pre-Christmas trading period. During the three months, Richemont also put an increased focus on its own-store network and has been keeping an ever-tighter rein on distribution.
At constant rates, wholesale sales were down 3 percent, while at actual rates they declined by 8 percent. The company said the decline in wholesale was due to “qualitative upgrades” to its external distribution network and the monitoring of inventory at its multi-brand retail partners.
Richemont has been keeping a beady eye on the distribution of its specialist watches in the wake of a contraction — and subsequent recovery — in worldwide demand. As reported, the company has been taking pains to adjust to what it has called the “new normal” of high-end watches, and has been careful not to overload the market with merchandise.
Sales at Richemont’s specialist watchmakers division, which includes brands such as IWC Schaffhausen, Jaeger-LeCoultre and A. Lange & Sohne, climbed 1 percent at constant rates and fell 4 percent at actual rates in the three months to Dec. 31.
Richemont said the modest growth came from its “continued monitoring” of sell-in versus sell-out in the retail channel.
Cartier, Van Cleef & Arpels and Giampiero Bodino, which sell jewelry and watches, saw sales in the period climb 11 percent at constant rates and 5 percent at actual ones.
Richemont said an 8 percent uptick in the Americas region at constant exchange was driven by the jewelry houses, while 11 percent growth in Asia-Pacific came both from the jewelry houses and the specialist watchmakers.
Specialist watchmakers and a favorable currency environment fueled a 5 percent increase in sales in Japan at constant rates, while sales in the Middle East and Africa were up 11 percent, fueled by currency tailwinds, the buyback of external sales points and the anticipated introduction of a VAT in the United Arab Emirates.
Europe lagged behind the other regions, with sales down 1 percent at constant exchange, which Richemont said was due to the strength of the euro and “challenging” comparisons with last year when the lower pound boosted U.K. consumers’ appetite for luxury goods.
The company added that Montblanc, Chloé and Lancel also saw growth in the three months and that, excluding the impact of the sale of Shanghai Tang last year, its other businesses category would have recorded moderate growth.
The third-quarter numbers beat analysts’ expectations. Luca Solca of Exane BNP Paribas called the third-quarter update “solid,” while Rogerio Fujimori of RBC Europe said Richemont’s sales mix in the period was better than expected, with material growth from jewelry, its most profitable division.
He wrote in a report that the overall sales quality was also better than expected, with retail gains offsetting wholesale declines. He also pointed out that jewelry and watches saw double-digit growth at retail despite tougher comparatives with the corresponding period last year.
Richemont shares closed up 0.6 percent at 89.60 Swiss francs on Thursday.