Geneva—Compagnie Financière Richemont SA, the world’s second largest luxurygoods group after LVMH, reported today that its third quarter sales slowed as its Asia Pacific sales slowed for the first time in four years.
For the quarter ended Dec. 31, Richemont posted a 9% sales rise to 2.86 billion euros (about $3.81 billion) compared to a 24% increase a year earlier. Analysts’ average estimate expected 2.89 billion in sales.
The results from Richemont, parent to Cartier, Montblanc, Baume & Mercier among others, echoed slower sales reported by its rivals Swatch Group and Tiffany & Co. earlier this month.
In Asia Pacific, which has been the company’s biggest growth region, sales rose 6% but were flat at constant exchange rates. In Europe, where sales have been helped by Asian, especially Chinese tourists, sales rose 11%. In the Americas, sales increased 18%.
‘Unclear Business Patterns’ in Asia Pacific
“At this stage, it is unclear how business patterns may develop and how the business in the Asia Pacific region will evolve in the near future,” Richemont said.
Sales in the company’s watch division increased 9% excluding currency fluctuations, missing analysts’ average estimate for an 11% increase.
In its jewelry sales, Richemont posted a 4% increase at constant exchange rates, but again missed analysts’ consensus for a 10%. The jewelry division accounts for about half of the company’s total sales. Richemont also gets revenue from businesses including Net-a-Porter and Alfred Dunhill.
The missed sales figure “isn’t a nightmare, but it is still disappointing,” Patrik Schwendimann, an analyst at Zuercher Kantonalbank, told Bloomberg.” The prior year’s high growth of 36% in the Asian-Pacific region wasn’t easy to beat, but we still expected a better figure.”
The slowed down results reflect slower growth in China’s economy, which expanded at 7.8%, its slowest pace since 1999.
There are little clouds on the horizon, and there’s going to be a period where the data are fragile,” said Jon Cox, head of Swiss research at Kepler Capital Markets.
In other news, Richmond’s Baume & Mercier watch brand agreed to form a joint venture in China with Chow Tai Folk Jewelry Group Ltd. to distribute the Swiss brand’s watches. Chow Tai Folk is the world’s largest jewelry chain by market value.
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