LONDON – In the fiscal first quarter Compagnie Financière Richemont posted double-digit revenue gains across all product categories and regions, except for Asia-Pacific. It achieved the results against an uncertain economic backdrop plagued by surging inflation, ongoing supply chain problems, and the impact of lockdowns in China.
At actual exchange rates, sales rose 20 percent to 5.26 billion euros. At constant rates they were up 12 percent in the April to June period.
The positive results weren’t enough to lift the shares, which were down 4.8 percent at 96.04 Swiss francs in mid-morning trading. The shares ended the day down 2.9 percent at 98.02 Swiss francs.
In a trading update on Friday, the parent of Cartier, Van Cleef & Arpels and Chloé said the U.S. became its largest single market in the three-month period, with sales climbing 41 percent to 1.34 billion euros due to domestic spending.
At constant exchange, sales in the U.S. were up 25 percent and accounted for 22 percent of overall sales in the three months.
At constant rates, sales in Europe grew by 42 percent sustained by “robust domestic demand,” and a return in tourist spending, primarily from American and Middle Eastern clients. Richemont said growth was strong across the European markets, and particularly in France, where sales increased in the triple digits.
Lockdowns in the Asia-Pacific region led to double-digit sales declines in in Mainland China and Macau SAR, and to a single-digit sales reduction in Hong Kong SAR. Richemont said that sales in Mainland China were 37 percent lower for the quarter, although the rate of decline “softened” to 12 percent in June when restrictions were progressively eased.
Australia, Singapore, South Korea and Thailand mitigated declines in the region, with Asia Pacific overall contracting by 15 percent at constant rates and 8 percent at actual ones.
Japan posted the strongest regional performance with an 83 percent uptick in sales at constant exchange, supported by strong local demand. Sales in the Middle East and Africa increased by 6 percent on tough comparisons with last year, reflecting “solid domestic and tourist spending, notably in Dubai and Qatar,” Richemont said.
Richemont’s overall retail sales rose by 18 percent, driven by double-digit increases across all business areas, with noteworthy performances in Europe, the Americas and Japan. Online retail sales increased by 5 percent, reflecting “muted sales progression” at the group’s online distributors, including Yoox Net-a-porter Group and Watchfinder.
By contrast, Richemont said it saw strong online growth at its jewelry maisons and specialist watchmakers.
By product category, jewelry was up 12 percent at constant exchange, benefitting from “thriving retail sales” at Buccellati, Cartier and Van Cleef & Arpels. Sales in Richemont’s watchmaking division increased by 10 percent at constant rates, driven by online and offline retail sales.
While most watch maisons and regions did well, Richemont noted that A. Lange & Söhne, Panerai and Vacheron Constantin continued to outperform the other brands in the watch stable.
Richemont’s fashion and accessories houses posted a 28 percent increase in the period, supported by strong retail and wholesale sales, and “sustained demand across the various brands and regions.”
Golf and sports apparel brand Peter Millar “continued to deliver a robust performance,” while Delvaux also made a “strong” contribution to the quarterly sales. Richemont said that new designer hires at Alaïa, Chloé and Montblanc “positively impacted sales.”
Richemont’s net cash position on June 30 was 5.4 billion euros, compared with 3.6 billion euros in the corresponding period last year. The company said the latest figure reflected quarter’s strong trading as well as replenishment of inventories.
Royal Bank of Canada called Richemont’s performance in the quarter “reassuring” particularly in the context of the headwinds in China, and said revenues were 5 percent ahead of consensus.
Barclays said that Richemont’s jewelry maisons reported “solid growth” and that Europe and the Americas came out above expectations while Asia Pacific was weaker than anticipated.
The bank said that sales in China were down 37 percent in the quarter “which we think was broadly expected. Sales were down 12 percent in June, as the country started to re-open.”
Bernstein said that Richemont’s double-digit growth – in the face of a double-digit decline in China due to lockdown restrictions — “are a testament to the continuing strength of high-end consumer demand.”