Richemont sees sales rise as Hong Kong protests dent watch growth
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Richemont sees sales rise as Hong Kong protests dent watch growth

Mainland China proved to be a boon for luxury giant Richemont, as demand in the world’s most populous country more-than made up for issues elsewhere. Chief amongst those issues was neighbouring Hong Kong, where protests hit sales of Richemont’s high-end watches, and a slowdown in Europe, where revenues fell slightly.

Richemont’s share price has appreciated by 37% so far this year

Richemont July 23

Source: Yahoo Finance

Overall, it was a great quarter for Richemont, the owner of brands like Cartier and Van Cleef & Arpels, with sales rising 12% year on year to 3.74 billion euros. The drivers behind this strong showing were strength in Richemont’s core category of jewellery and strong demand from mainland China. Richemont’s jewellery showing is so strong, in fact, that competitors have taken note and are trying to move into the space (Kering’s Gucci being the biggest name).

Countering this success was a weakening in Europe, where revenues fell by 1%, and shoddy watch sales in Hong Kong – until last quarter, when it was overtaken by the US, the world’s largest luxury watch market. Richemont is not unique in struggling with its timepieces last quarter. As analysts at Vontobel wrote in a note: “specialist watchmakers were once again rather weak, still impacted by distribution optimisation.”

Another outperformer in regards to the last quarter was Richemont’s online sales platforms, like Yoox Net-a-Porter, which it took full control of last year. The company said without these channels, and with currency effects stripped out, overall sales would only have risen by 3%.

Disclosure

Dominion holds Richemont in its Global Trends Luxury Fund.


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