Geneva– Cie. Financiere Richemont SA, the Swiss luxurygoods parent to Cartier, Van Cleef & Arpels, Montblanc etc, today reported its third quarter revenue was off for the first time in six years due to disruptions in its Hong Kong business from pro-democracy protestors there.
For the quarter ended Dec. 31, Richemont posted flat sales excluding currency shits compared with a year-ago period. Analysts expected 1.5% growth. Much like Burberry’s report earlier this week, Richemont pointed to Hong Kong, which accounts for about 25% of total sales, as the culprit.
“The decline in sales by the group’s specialist watchmakers reflected both caution on the part of business partners in the wholesale channel and a lower performance of some retail locations, most notably in Hong Kong and Macau,” the maker of IWC and Jaeger-LeCoultre watches said. Richemont abstaining from giving any kind of forecast, too.
Sales in the Asia-Pacific region declined 12% at constant exchange rates amid a difficult trading environment in Hong Kong and Macau, said the company. That compares with the 5.8% drop analysts had estimated.
Net cash rose 14% to a record 4.9 billion euros, said the company.
Many analysts commented on the return of Johann Rupert, the South African billionaire, as Richemont’s chairman, who had taken a year off.
“The return of Mr. Rupert to the helm of the company after his sabbatical could be an accelerating factor for the M&A strategy of the group,” Mario Ortelli, analyst at Sandford C. Bernstein, said. The analyst expects improvement in the second half due to a foreign-exchange reversal, retailers ordering more after having run down their inventories, and a possible new line of Cartier watches.
Richemont reported a 4% drop in first-half operating profit in November, when the company also said the decline in the Chinese market was moderating.
“Asia Pacific is clearly disappointing,” Patrik Schwendimann, an analyst at Zuercher Kantonalbank AG, told Bloomberg News. “Watch sales in Asia are still impacted by high inventories and cautious retailers. There are rays of hope elsewhere: Europe, with domestic demand and tourism, the Middle East and the U.S.”