LONDON — COVID-19 took a bite out of fourth quarter sales at Compagnie Financière Richemont, forcing them down 18 percent in the three months to March 31, with Asia Pacific and China hit the hardest.
The parent of brands including Cartier, Van Cleef & Arpels and IWC said Friday that Asia Pacific overall was down 36 percent, with China alone falling 67 percent. Sales in Europe declined 9 percent while the U.S. was up 9 percent in the three months.
Johann Rupert, chairman and company founder, said while there was “limited visibility” on the impact of the pandemic in the short and medium term, the long-term fundamentals of hard luxury remained robust.
He was also upbeat about China, adding that since Richemont’s 462 boutiques reopened in China after the virus, the company has seen “strong demand.” At the same time, Rupert warned that other economies “will probably find it difficult to emulate China. We may be looking at 12, 24 or 36 months of grave economic consequences. Perhaps that is too pessimistic, but who knows?”
For the full 2019-20 fiscal year, group sales for the year increased by 2 percent at actual exchange rates to 14.24 billion euros. Richemont said growth was driven by online distributors and jewelry maisons with good performances in the Americas, Europe and Japan more than offsetting a decline in Asia Pacific.
Operating profit for the year fell 22 percent to 1.52 billion euros, while profit for the year decreased to 931 million euros, reflecting the nonrecurrence of a posttax noncash gain of 1.38 billion euros on the revaluation of Yoox Net-a-porter shares held prior to acquisition, and net foreign exchange losses on monetary items.
The company’s net cash position remained strong at 2.4 billion euros, and the company said given the impact of the pandemic and the furloughs it has had to enact, it will distribute a lower dividend of 1 Swiss franc for each A share and for each 10 B shares for the year.