LONDON — Double-digit growth at Yoox Net-a-porter Group and robust demand in mainland China bolstered Richemont’s third-quarter sales, offsetting declines caused by protests in France during the key holiday period.
Compagnie Financière Richemont said in a trading update Friday that sales in the three months to Dec. 31 rose 25 percent to 3.92 billion euros. At constant exchange rates, they were up 24 percent.
Stripping out YNAP and Watchfinder, online businesses that were consolidated in May and June 2018, respectively, sales rose 6 percent at actual rates, and 5 percent at constant ones, with growth in all regions except for the Middle East and Europe.
Organic growth slowed in Q3 compared with the first half. In the first six months, sales had risen by 6 percent at actual exchange rates and by 8 percent at constant exchange rates.
Third-quarter sales in Europe were affected by social unrest in France, with the often violent “gilets jaunes,” or yellow vests, protests negatively impacting tourism and leading to store closures for six consecutive Saturdays.
Richemont was not alone, with scores of luxury stores boarding up shops on the Saturdays when the protests were taking place.
Richemont said the disposal of Lancel in June 2018 also weighed on the year-on-year sales growth in Europe. Lancel was sold to the Italian company Piquadro last summer.
A 10 percent increase in sales in Asia-Pacific reflected double-digit growth in mainland China and “good increases in other main markets,” according to the luxury giant.
Mainland China may have been thriving, but sales growth in Hong Kong slowed, primarily due to the strength of the Hong Kong dollar versus the renminbi that resulted in lower tourist spending, Richemont said.
In Japan, a 7 percent expansion in sales was driven by continued domestic and tourist spending as well as the impact of newly opened directly operated boutiques. Unfavorable currency movements and a strong basis of comparison weighed on sales in the Middle East and Africa, which decreased by 13 percent over the period.
Sales in the Americas rose by 9 percent, benefitting from “good performance” from Cartier and Van Cleef & Arpels, and Richemont’s other business area, which includes Dunhill, Alaïa, Chloé, Montblanc and Peter Millar. Sales in those businesses overall rose by a mid-single digit, excluding the impact of the Lancel sale.
Richemont said the 8 percent rise in its jewelry division, mainly the Cartier and Van Cleef & Arpels brands, was driven by jewelry and watches.
Regarding the new online businesses, YNAP posted double-digit growth across all regions with “solid performances across all its business lines,” and Watchfinder’s sales expanded “more moderately,” the company said.
Retail sales were up 5 percent, with growth slowing in December due to the store closures in France and a strong comparative base for high jewelry. Wholesale sales were up 1 percent, reflecting ongoing cautious watch inventory management and a tighter distribution strategy.
Sales at Richemont’s specialist watch division were up 1 percent at actual rates.
Richemont’s net cash position on Dec. 31 amounted to 2.3 billion euros with a gross cash position of 6.6 billion euros following a corporate bond issued in March 2018.
The company did not give an update on its progress setting up a joint venture with Alibaba. As reported, Richemont and Alibaba plan to partner on a business that will bring YNAP and Mr Porter services to the Chinese customer at home and abroad.