LONDON — For luxury goods brands, the current fiscal year is set to end with a whimper, judging from the rough start to the second half witnessed by Compagnie Financière Richemont.

The world’s second-largest luxury group notched a surprise 1 percent decline in sales in October at actual currency rates — and a 6 percent drop at constant ones.

The figures fell well short of analysts’ expectations and sent Richemont’s share price into a nosedive. October’s numbers also overshadowed what was a strong first half for the group, with a 22 percent uptick in first-half profits and 14.7 percent increase in sales in the six months to Sept. 30.

By 1 p.m. CET, Richemont’s stock had fallen 8.1 percent to 79.60 Swiss francs, or $80, and ended the day down 5.7 percent to 82.00 Swiss francs, or $82.

Chairman and shareholder of reference Johann Rupert said the trends developing over the past six months had gained momentum in October.

“The patterns seen in the first six months in terms of geography, product and channel mix were accentuated during the month, with growth in Europe and Japan, albeit at a lower rate, offsetting continuing weakness in Asia-Pacific and the Americas,” he said.

In the second half, Richemont expects the situation, particularly in wholesale, to continue to be challenging although Rupert is upbeat about the long-term — the view he always takes.

“The demand in the retail environment remains healthy, demonstrating the continued desirability for the craftsmanship and quality of our maisons,” he said.

Despite the difficult environment, Richemont saw its jewelry division boom in the first half, and witnessed regions such as Japan, Europe, the Middle East and Africa notch substantial double-digit growth. Retail sales from own brand stores were robust.

The wholesale watch channel was the sector putting the brakes on growth, and Richemont is not alone: Overall Swiss watch exports plunged 7.9 percent in September on the back of weakness in Asia, which accounts for more than 50 percent of total exports in terms of value. Exports of Swiss timepieces totaled 1.8 billion Swiss francs, or $1.85 billion, according to the Federation of the Swiss Watch Industry. Hong Kong showed no signs of improvement, falling 18.2 percent, while China posted a 13 percent decline.

The Chinese government’s crackdown on big-ticket gifting, the country’s stock market crash earlier this year and shifting patterns of Chinese tourist demand in the area all conspired against wholesale performance in watches in the period.

Gary Saage, Richemont’s chief financial officer, said during a conference call that the wholesale watch channel began to decline in October 2014. “It has been difficult for the whole year,” he said, adding that the retail channel for watches remains robust.

“We control our inventories well. Cartier and all the brands will try and assist their partners by taking stock back that’s maybe isn’t working and giving some pieces that work,” Saage said. “Clearly for us the high end is still difficult, especially the gold-on-gold and the heavy jewelry pieces. The lower end is doing better. But the headline numbers are difficult, so it doesn’t look great. When is it going to turn? I don’t know. But the demand is still there in retail so that’s good.”

As strong as they were, even the first-half figures disappointed analysts perhaps because the profit figure stemmed more from financial engineering than strong product performance.

Profit climbed to 1.1 billion euros, or $1.22 billion, with the gain reflecting currency trends, as well as cost controls and price adjustments aimed at mitigating the impact of the stronger Swiss franc. In addition, Richemont banked far fewer market-to-market net losses linked to currency hedging, which had taken a bite out of the bottom line a year ago.

Sales at the parent of brands including Cartier, IWC , Chloe and Alfred Dunhill were up 14.7 percent, due to a robust performance at the Richemont brands’ own retail stores and in the jewelry division, which now generates one-third of group sales.

Sales, at 5.82 billion euros, or $6.46 billion, also received a boost from favorable currency trends; at constant-currency rates for the six months, sales growth was 3 percent.

All figures have been calculated at average exchange rates for the periods to which they refer.

Luca Solca, managing director at Exane BNP Paribas, said Richemont’s performance in the first half confirms not only a difficult demand environment for luxury goods, but a likely “low-key end to a soft 2015 for the industry.”

He said Richemont’s sales progression at 3 percent was below consensus expectations of 3.9 percent, and that October’s performance was a disappointment. In October, analysts had been anticipating a 4 percent gain, not a 6 percent contraction, at constant currency.

“Hong Kong and Macau take a toll, particularly on watches, where operating margin is down, as opposed to jewelry,” where the decline is less, Solca said, adding it’s “reassuring” that Richemont is able to maintain inventory levels, as well as strong free cash-flow generation.

Late last month Solca had already expressed his pessimism about growth prospects for luxury goods in the second half.

“We see a big elephant in the room affecting luxury goods growth in 2016: The prospect of more muted GDP growth globally. We have already shown that growth in personal luxury goods and global GDP go hand in hand. Consensus global GDP growth of 3.4 percent implies that the luxury market would grow by 5 percent in the full 2015-16 year. But GDP growth consensus is sliding,” wrote Solca.

Thomas Chauvet at Citi called Richemont’s first half results “disappointing in many ways,” and said the earnings miss, weak current trading and lack of visibility into the second half are likely to put pressure on the group’s shares in the near term. He said Richemont’s share price is lagging substantially behind its luxury peers.

Chauvet also pointed out that the departure of Stanislas de Quercize, chief executive officer of Cartier, which Richemont revealed early Friday, “will add more uncertainty to a challenging second-half outlook and raise further questions on the timing of Cartier watch business recovery in our view.”

Cartier generates about 65 percent of group profits, according to Citi’s calculations.

De Quercize, who resigned for personal reasons, will be succeeded by Cyrille Vigneron, who is currently the president of LVMH Moët Hennessy Louis Vuitton Japan. De Quercize will remain as a group executive, taking over the role of chairman of Richemont France.

The company did not elaborate on, or give any more details about, de Quercize’s departure.

Rupert called the first half results “satisfactory,” and said tourist traffic remained an important part of the group’s sales.

In the six months, retail sales grew 26 percent, while wholesale sales were up just 4 percent. By region, Japan was up 49 percent; Europe, 26 percent, and the Middle East and Africa, 24 percent. The U.S. grew by 19 percent while Asia-Pacific was down 3 percent. Saage said on the call that Mainland China grew 1 percent, due mostly to retail.

Europe, the company said, benefitted from good levels of tourism — including American tourists — while the Americas saw “subdued demand” overall, with lower watch sales offset by growing sales in jewelry, clothing and leather goods categories.

“You could argue — but I’m not going to argue it very hard — that while the American consumer was OK, they didn’t buy it in America. And, because of the strong dollar, the tourism flow is a bit weaker,” Saage said.

Pressed on the question of U.S. performance, Saage said the company saw many more Americans buying in Europe during the summer. “Surely that’s currency related, but that doesn’t help the recent performance in U.S., which is still very tourism driven.”

By category, jewelry sales were up 18 percent, while the specialist watchmakers grew 8 percent and the “other” category advanced 17 percent. The latter division reduced operating losses to 11 million euros, or $12.2 million, in the period, due to positive performances by Montblanc, Chloe and Peter Millar, Richemont said.

Commenting on the bounce in jewelry, Saage said a lot has to do with the market itself. “There’s a lot of inherent positive in it: Men like to give it, women like to receive it. We estimate that branded pieces represent about 16 percent of the total jewelry market.

“Recently, we made a big investment in the higher end pieces, design pieces where the designers and jewelers can make something spectacular — and it’s working. The Asian consumer, not just Chinese, but Japanese as well, are starting to get attracted by the high-end and that continues,” Saage said.

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