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Richemont, the owner of Cartier, Van Cleef Arpels and Chloé, said sales grew 19 per cent at constant exchange rates in the first quarter ending 30 June, just below consensus expectations (at 20 per cent). However, a fall in revenue from the Americas sent its share price down by around 6.5 per cent in early trading on Monday.
Richemont said growth was led by Asia Pacific (up 40 per cent) and jewellery maisons (up 24 per cent). The luxury group stressed the “substantial sales increases” in Asia Pacific, ranging from double-digit growth in mainland China to triple digits in Hong Kong and Macau.
Sales in the Americas declined by 2 per cent, compared with a 12 per cent rise in the fourth quarter of 2022/23. Richemont said this was largely due to a slump in wholesale, while “retail sales broadly aligned with the prior-year period”.
Luxury brands have been benefitting from an uplift in sales in China, which has offset the weakening of the US to a varying extent. Last week, British luxury brand Burberry reported a 17 per cent rise in first-quarter sales; sales in Mainland China were up 46 per cent, while its US revenue fell 8 per cent. A recent report by management consultancy Bain and Italian luxury association Altagamma predicts that the US slowdown will continue as rising inflation rates and a lingering recession causes aspirational luxury consumers to limit their spending. LVMH, Kering and Hermès will report their first quarter earnings on 25, 27 and 28 July respectively.
Consultancy Bernstein downgraded Richemont late last year to “Market Perform” (from “Outperform”). “Our logic was that consumers would prioritise soft luxury (new dresses, new shoes, new bags) in a reopening trade [in China] plus design jewellery would be a harder sell to middle-class consumers in a slowing macroeconomic context given its big ticket item nature,” Bernstein’s senior analyst for luxury goods Luca Solca explained in the note.
Sales at Richemont’s specialist watchmakers division, which houses brands like Vacheron Constantin and Piaget, were up 10 per cent. “Other” businesses, which includes fashion and accessories brands such as Chloé and Alaïa, and Watchfinder Co, grew 6 per cent. Sales across its fashion and accessories maisons (excluding Watchfinder, the group’s watch component manufacturing, real estate activities and other non-fashion companies) grew by 8 per cent “on demanding comparatives”, the company said, noting that Montblanc is starting to “benefit from an evolving product offering and a revival in the travel retail channel”. Chloé, which just confirmed the departure of its creative director Gabriela Hearst, “is progressing well in its ‘retailisation’”, while Alaïa, Delvaux and Dunhill “also posted strong contributions”.
Sales were up 11 per cent in Europe, “sustained by resilient domestic demand and tourist spending, largely from American, Middle Eastern and, more recently, Chinese clients”. Revenue grew 14 per cent in Japan and 15 per cent in the Middle East and Africa.
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