Richemont sees watch sales rise 7% in first half
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Richemont sees watch sales rise 7% in first half

Luxury titan Richemont, well-known for its watch and jewellery brands such as Cartier and Van Cleef & Arpels, has reported “high single digit growth in watches” for the first half of 2018. The company said that watch sales increased by 7% year over year to 2.49 billion euros, in the period ending September 30. Driving this growth was a reinvigorated Cartier brand, which the company described as having “pivoted back to the elegant gentleman.” This contrasted with what Richemont’s chairman Johann Rupert called “muted sales growth” for the company’s Specialist Watchmakers division.

Richemont’s share price has declined by 1% over the past five days

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Source: Yahoo Finance

Total group sales increased by an impressive 24% to 6.81 billion over the six-month period (measured against the comparable period in 2017). However, that was largely due to acquisitions (Yoox Net-a-Porter and Watchfinder). Excluding acquisitions, sales grew by 8% year on year.

Berkhart Grund, the group’s chief financial officer, said: "Growth in the six months under review was driven by the Jewelry Maisons and the strength of our online and offline stores, including for watches."

One area that continues to hold Richemont back is soaking up the oversupply that previously defined the high-end watch industry’s difficulties, and soaked through grey markets. Grund says that this is a situation that is now firmly in hand, and procedures are in place to prevent a similar occurrence in the future:

“This is now a KPI [key performance indicator] that we follow every month. It reflects our unwavering commitment to clamp down and end grey market trading, because we do not want to feed products, directly or indirectly, into the grey market. That has resulted in the closing down of some accounts. At the same time, we are continuing to monitor the sell-in, which has to be below the sell-out. That has led to a slightly negative wholesale performance at the Specialist Watchmakers.”

Disclosure
Dominion holds Richemont in its Global Trends Managed Fund.


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