Compagnie Financière Richemont reported sales gained 5 percent during the holiday selling period, with its jewelry and fashion maisons offsetting weakness in watches and anemic consumer traffic in mainland China, then gripped by a “massive COVID-19 resurgence.”
Revenues in the three months ended Dec. 31 totaled 5.4 billion euros. Excluding the impact from Russia, group sales rose by 7 percent at constant exchange rates.
The results fell short of consensus expectations by 5 percent, according to equity analysts at Bernstein and RBC.
The trading update, the first of 2023 from Europe’s big-three luxury conglomerates, points to attenuated demand for luxury due to high comps and amid disruptions in China at the end of last year.
By contrast, revenues during Richemont’s third quarter rose 43 percent in Japan, 19 percent in Europe and 10 percent in the Middle East, where the company flagged benefits from the World Cup in Qatar alongside “sustained local demand.”
At constant exchange rates, sales in the Americas improved 3 percent, with Richemont attributing this “moderated” growth to “a greater share of purchases abroad given the strong U.S. dollar.”
Europe’s buoyancy reflected “continued strength in local and tourist demand, particularly from the U.S. and Middle East…France, Italy and Switzerland’s performances were particularly noteworthy.”
Revenues in the Asia-Pacific region declined 9 percent at constant exchange rates, with the buoyancy in South Korea, Australia and Singapore only partially mitigating lower sales in mainland China, Hong Kong and Macau.
“The massive increase of COVID-19 cases negatively impacted customer traffic and, due to staff unavailability, led to a reduction of boutique opening hours or temporary closures of points of sale in mainland China, leading to a sales drop of 24 percent during the period under review,” Richemont said.
The group’s flagship jewelry brands — Cartier, Van Cleef & Arpels and Buccellati — grew 8 percent in the three-month period, contrasting with a 5 percent dip for its specialist watchmakers, which include Baume & Mercier, IWC Schaffhausen, Jaeger-LeCoultre, Panerai and Vacheron Constantin.
The company noted that Asia-Pacific typically generates half of Richemont’s timepiece sales, and the region registered double-digit declines.
Richemont cited higher sales across most of its fashion and accessories maisons, particularly Alaïa and Peter Millar, amounting to 6 percent sales growth in its “other” business area, which also encompasses AZ Factory, Chloé, Delvaux, Dunhill, Montblanc, Purdey, Serapian and Watchfinder & Co.
Following its decision last August to sell a majority stake of the loss-making Yoox Net-a-porter Group to Farfetch and Alabbar, YNAP’s results were presented Tuesday as discontinued operations. In the third quarter, YNAP sales shrank 6 percent.
Richemont noted its net cash position at the end of the year stood at 5.5 billion euros. The group is scheduled to report full results for its financial year ending March 31 on May 12.
LVMH Moët Hennessy Louis Vuitton is to unveil its fourth quarter and full-year results on Jan. 26, and Kering on Feb. 15.