LONDON — Robust jewelry sales and stronger demand in Europe and Mainland China helped Compagnie Financière Richemont outstrip analysts’ projections and post a 5.7 percent uptick in third-quarter sales to 3.09 billion euros, or $3.34 billion.
Richemont, parent of Cartier, IWC and Dunhill, saw sales growth in all regions, with the exception of Europe, which was down 1 percent at actual rates, but up three percent at constant exchange rates. Figures are converted at average exchange rates for the three months to Dec. 31.
During the quarter, the decline in watch sales slowed to 2 percent, with positive growth in the retail channel offset by continued weakness in the wholesale channel, Richemont said.
The growth in overall sales comes after a tough first half that saw revenues fall 12.6 percent and profits decline 51 percent, as the watch business continued to suffer.
Although business picked up in the quarter, Richemont warned that net profit for the year will face tough comparatives due to the prior year’s inclusion of a substantial non-cash gain relating to the merger of Net-a-porter with Yoox to form Yoox Net-a-porter Group, which is now listed on the Milan Bourse.
Analysts had expected Richemont’s growth to range from flat to a 5 percent decline, despite easier year-on-year comparisons from the anniversary of the 2015 Paris terrorist attacks.
Richemont said its other businesses posted good growth, mainly driven by Chloé, Montblanc and Peter Millar. Richemont is, once again, restructuring its Dunhill business, with 25 store closures set for the second half and merchandise write-downs planned, according to analysts.
Sales over the nine-month period to December declined by 6 percent at constant exchange rates and by 7 percent at actual exchange rates.
The third-quarter results come amid a challenging year that has already seen Richemont lay off Swiss watch workers and buy back high-end timepieces from its wholesale clients as sales decline. A crackdown on bribery in China and a change in tourism and shopper habits has reshaped the dynamics of the business, with Richemont — and other big companies — forced to adjust to the new normal of lower sales growth.
Richemont is also adapting its watch offer and implementing cost reductions at headquarters and regional levels.