LONDON — Now it’s Richemont’s turn.
Shares in Compagnie Financière Richemont dropped 4.1 percent on the SIX Swiss Exchange to close at 84 Swiss francs, or $90, after the luxury goods group said sales grew 1 percent in the first five months, and 4 percent at constant exchange rates. The latter was the slowest growth in five years, when Richemont’s sales fell in the first five months of 2009 during the midst of the global recession.
The parent of brands including Cartier, Van Cleef & Arpels, IWC, Chloé and Dunhill missed analysts’ estimates and blamed its latest performance on currency headwinds and “subdued” demand for luxury goods worldwide. Hong Kong, Macau and Mainland China showed particularly sluggish growth, Richemont said.
The company offered minimal analysis in its trading statement and — unusually — did not comment on September business.
The sluggish growth at Richemont follows in the wake of fellow luxury groups Kering and LVMH Moët Hennessy Louis Vuitton, both of which posted muted sales figures over the summer due partly to slackening demand in China and currency fluctuations. Kering’s second-quarter sales rose 1.8 percent, while revenues at LVMH for the same period increased 1.3 percent.
“We saw the weakness in Hong Kong affecting companies across the sector — Ferragamo, Swatch, Kering and LVMH,” said one London-based luxury goods analyst, who requested anonymity. “It’s not Richemont in particular that’s underperforming. It is continued social and political tension in China and Hong Kong.”
The analyst said the “volatility” is expected to continue into the fiscal third quarter.
Hong Kong’s economy contracted in the last quarter due mainly to a decline in tourist and domestic spending as China’s antigraft campaigners intensify their efforts. Watches and jewelry in particular have suffered from Mainland China’s austerity drive, and these are two areas where Richemont’s portfolio of brands is heavily focused.
Richemont noted in its trading statement that watches suffered from weak demand and destocking, particularly in the Asia-Pacific region.
Luca Solca, managing director and sector head of global luxury goods at Exane BNP Paribas, said Richemont’s numbers “confirm the overall subdued impression” from his recent field trip to LVMH. “But I don’t have a sense things are getting worse. We are in for a slow ride” in the second half, he said.
“No inflection in consumer demand trends and trading momentum is in sight, while corporates are prepared for more of the same moderate organic growth,” Solca noted.
Morgan Stanley’s luxury analysts were in agreement, writing that following their August field trip to Hong Kong, “We think the trough has passed, but continued pressure on the high-end range will likely continue into [the 2015 calendar year],” they wrote.
Citi had expected Richemont’s five-month sales at constant rates to hit 7 percent, while the consensus was for 6 percent growth at constant rates. In the corresponding period last year, Richemont’s sales at constant rates grew 9 percent.
Richemont said the weakening of the dollar and the yen against the euro inflicted damage on the final, reported growth rates.
The scheduled trading statement gave percentage figures only, and full interim results will be reported Nov. 7.
At both constant and actual rates, sales in Europe and the Middle East regions were up 6 percent, with double-digit increases in the Middle East. Richemont said that both regions continued to benefit from tourism, although sales growth remained low in Europe.
Sales in the Asia-Pacific region fell 2 percent at actual rates, and were flat at constant ones, with Hong Kong, Macau and Mainland China showing particularly slow growth.
In the Americas region, sales were up 7 percent at actual rates, and 12 percent at constant ones. In Japan, sales plummeted 14 percent at actual rates and fell 8 percent at constant ones.
The Richemont statement said that prudent consumer sentiment in Japan and a surge in purchases in March ahead of a sales tax increase dampened sales in the April-to-August period, as expected.
By product category, jewelry sales were flat at actual rates and advanced 2 percent at constant ones, while the specialist watchmaker category advanced 2 percent at reported rates and 4 percent at constant ones. Richemont’s Other category, which includes brands such as Montblanc, Dunhill and Net-a-porter Group, advanced 5 percent at actual rates and 6 percent at constant ones.
Retail sales growth continued to outstrip wholesale sales, albeit at a lower level than a year ago, the company said, adding that the retail performances at Van Cleef & Arpels and at Net-a-porter in particular were robust.
On Wednesday at its annual general meeting, the company welcomed back Johann Rupert, who was elected chairman of the board. Rupert, the company’s lodestar and shareholder of reference, had been on a year’s sabbatical for health reasons. The outgoing chairman, Yves-André Istel, and Josua Malherbe, a non-executive director, were named deputy chairmen earlier in the week.